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Natural gas futures higher amid a winter freeze

By Daniel Tyson

18:41, 5 January 2022

Flames on a natural gas stove
A colder January ushers in rise in natural gas futures

With nearly 80 million Americans under winter weather advisories, natural gas futures were warming up Wednesday afternoon.

At 12:30 p.m. EDT (UTC-5) Wednesday, February deliveries on the New York Mercantile Exchange were nearly 3.5% higher to $3.84MMBtu.

On Tuesday, gas reached a high of $3.94MMBtu, but, by closing, February contracts fell sharply as mid-January weather patterns were volatile. Investors optimistic about the market were hoping to profit after weeks of declines.

Overall, natural gas futures were down $0.34 last week, according to the US Energy Information Administration, to $3.172 MMBTU. 

Storage draws

“The mild weather that plagued most of December is not expected to last… storage withdrawals for the 2021-22 season are predicted to actually exceed that of the five-year average well into January,” according to a daily briefing from Gelber & Associates, an energy consulting company in Houston, Texas.

Overall US gas production averages dropped from 96 billion cubic feet daily to below 94Bcf/d. Gelber wrote that the decline occurred across all primary natural gas-producing basins - Appalachian, Haynesville and Permian. Preliminary reports state several reasons for the decrease – seasonal start-of-the-year declines, plant turnaround, and operational issues due to colder weather hitting Texas.


0.61 Price
-0.890% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.01168


37,731.35 Price
-0.730% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00


2,040.72 Price
-0.050% 1D Chg, %
Long position overnight fee -0.0191%
Short position overnight fee 0.0109%
Overnight fee time 22:00 (UTC)
Spread 0.50

Oil - Crude

75.82 Price
-0.990% 1D Chg, %
Long position overnight fee -0.0186%
Short position overnight fee -0.0033%
Overnight fee time 22:00 (UTC)
Spread 0.030

“Regardless of the reason, prices have responded positively to the short-term falloff in production - in recent days, prices have crept upwards to the $3.81 mark, approaching the upper band of the $3.60-$4.00 range,” Gelber reported Wednesday morning.

Banner year

It’s accurate to describe natural gas futures as yo-yos in 2021, but they were up 47% at the end of the year. It was the best performance in five years and could be attributed to higher cooling demand during the summer months, hurricane-related disasters, and strong liquified natural gas exports.

However, there’s been a great deal of uncertainty in the market, which will likely continue into the new year. Warmer than usual weather in the November and December heating season has investors a bit hesitant.

Despite the weather forecast of even more winter cold this weekend, shares of natural gas companies were declining Wednesday afternoon. SilverBow Resources (SBOW) stock dropped more than 1.50% to $23.57, Comstock Resources (CRK) plummeted nearly 5% to $8.40. Ranger Resources (RRC) was up slightly to $18.82 and Chesapeake Energy (CHK) was trading at $67.96, up 1.77%

Read more: Natural gas generates high profits for oil companies

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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.
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