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US Natgas Prices Collapse 12% On Warmer Weather Trends 

Tyler Durden's Photo
by Tyler Durden
Monday, Nov 29, 2021 - 08:00 PM

U.S. Natural gas futures crashed as much as 12% on new weather models that forecast above-average temperatures for the U.S.-Lower 48 through the first half of December. 

Contracts for January delivery plunged 11% as of 1145 ET to $4.860 per million British thermal unit on the CME. Prices have slipped 25% from seven-year highs (at around $6.50) as traders reassess U.S. weather and the energy crisis in Europe and Asia. 

"Late-autumn cold in Europe and Asia has sparked fears that global gas shortages will worsen as nations struggle to refill stockpiles. But so far, there's little sign of a similar situation developing in the U.S., even as shale producers keep a lid on output and the country's exports of liquefied natural gas surge to a record," Bloomberg said. 

Even though it's late November, traders closely watch the widow-maker spread between Henry Hub's March and April contracts. The spread has collapsed in the past few months, which implies milder-than-usual weather. 

U.S.-Lower 48 average temperatures will be well above a 30-year trend line for the first half of December.

Warmer temperatures across the U.S. mean heating demand will diminish. 

Mild weather will pressure natural gas prices lower until the next update suggests otherwise. This is excellent news for U.S. consumers who are already battling near-record energy, food, and shelter costs. 

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