The Commodities Markets has seen big action this week on the back of global clues: China, Hong Kong opening up expected to push up the pent up demand for oil use and price; European Region and few Global Markets seen of the biggest gain in the Stock Markets in the first three weeks of 2023 and the softening inflation in the United States all these factors helping oil, gold bulls out in open and Natural Gas bear operator taking complete control on its biggest fall. 

Natural Gas: Market Activity

Natural Gas prices caught into a most volatile movement in its history, it hit a 14 year high of $ 10 per mmBtu or million metric British thermal units on the New York Mercantile Exchange in August 2021 to touch its lowest level since June 2021 of $ 3.17 on Friday this week lost another 7%; has erased 68% of the market’s value in just five-month period.

Natural gas futures seen a sudden collapsed in the month of December 2022; it is quite difficult to pinpoint the actual reason for the plunge in the gas prices. 

Analyst and Market Experts attributing this move towards,

1. Unseasonably warm winter temperatures described as the warmest start to a winter in 20 years which have left both European and U.S heating markets sufficiently supplied.

2. Higher build in gas storage due to conflict between Russia & Ukraine which result in increase in gas inventories.

3. Some anonymous analysts attribute this volatility outside fundamentals and more of a collusion or price fixing by big hedge fund operators, difficult to belief or establish.

Similar movement seen in the year 2005, where natural gas touched record hight of above $ 15 in December 2005 and barely took 9 months to reach $ 6 by September 2006 a swing of 60% on the downside. This time it took less than five months for 68% swing on the downside. Natural Gas appreciated 20% in the year 2022 and plunge 29% in the first three week of January 2023.

We expect Natural Gas to stabilize around $ 5 in a short-term period.