CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Global natural gas: European tensions and US weather impact prices

By Daniel Tyson

20:46, 19 January 2022

European gas pipeline
Natural gas prices drop despite wintry weather - Photo: Shutterstock

Geopolitics and the weather are the wild cards in the natural gas game Wednesday as prices plummeted, and storage continues at near-record lows.

At 2:45 p.m. EDT, February delivery futures on the New York Mercantile Exchange hovered at $4.03 MMBtu, down nearly 6%. By comparison last Wednesday, futures were selling at $4.88 MMBtu.

Colder weather

While heating demand will dip slightly below normal on Wednesday, an upcoming cold front could add 19 billion cubic feet daily of demand by Friday, a note from EBW AnalysticsGroup states.

Across the US, cold weather is expected to stay. Including the wind chill factor, most of the east coast, midwest and northern states are expected to see single-digit or negative temperatures.

Cold weather means higher thermostats send spot prices up. Higher Northeastern spot prices have justified higher Canadian imports into the US, as these basis points work to increase their local supply base in the midst of cold temperatures and higher regional natural gas demand. Canadian imports week-over-week have increased by around 0.7 billion cubic feet daily as a result, according to a client note from Gelber and Associates.

Withdrawals to grow

The energy advisors expect a weekly storage withdrawal of 194 billion cubic feet as colder temperatures expected to last through the end of January, withdrawals are expected to grow, with the following two weeks’ storage reports offering 200+ Bcf/d withdrawals.

“These strong withdrawals are expected to drop 2022 storage below the five-year average and into the underside of the five-year range. An average to mild February will be necessary in order to prevent 2022 storage from increasing the impending deficit between itself and the five-year average,” the note states.


14,366.20 Price
+0.770% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 1.8


0.51 Price
-2.060% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.00382


1,978.37 Price
+0.820% 1D Chg, %
Long position overnight fee -0.0089%
Short position overnight fee 0.0006%
Overnight fee time 21:00 (UTC)
Spread 0.30

Oil - Crude

70.11 Price
+3.470% 1D Chg, %
Long position overnight fee -0.0209%
Short position overnight fee -0.0010%
Overnight fee time 21:00 (UTC)
Spread 0.03

Analysts are closely watching Texas, who last year suffered freezing temperatures and hundreds of thousands of residents were without heat. The Texas power grid and the natural gas drillers, wind farms and solar arrays that supply it are facing their second test in less than a month as subzero weather bears down on the Lone Star state. Temperatures in wide swaths of the second-largest U.S. state are forecast to plunge to well below normal in coming days, according to the National Weather Service.

International tensions

Rising international tensions between Russia and Ukraine threaten to place the European gas market under additional pressure on top of under-average storage totals.

On Wednesday, the German government threatened not to put the finished natural gas pipeline Nord Stream 2 into operation if Russia were to attack Ukraine. What is more, Russian gas deliveries via the Yamal pipeline to Germany have been at a standstill for the past month.

According to the network operator Gascade, natural gas has even been flowing in the opposite direction – from Germany to Poland – since late December, an extensive research report from Commerzbank given to states.

In the event a full-on invasion occurs, these pipelines would be at risk to flow lower volumes as Russian flows to Ukraine halt. According to Gazprom, volumes from Russia and Belarus to Ukraine have also halved and volumes from Belarus to the EU have fallen all the way to zero.

“The European storage crisis could very well exacerbate this winter if diplomatic efforts with Russia fail. Germany has already warned Russia that it could halt the Nord Stream II pipeline in the event of a Russian invasion into Ukraine,” the report predicts.

Read more: Energy crisis: Are quick fixes risking long-term sustainability?

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 535.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading