U.S. natural gas prices have experienced a notable decline on December 13, 2024, as increased production levels begin to balance out the previously rising demand. The Lower 48 states have seen a surge in production, reaching 102.9 billion cubic feet per day in December, which has eased some of the demand pressures. Additionally, liquefied natural gas (LNG) export plants, such as Venture Global LNG's Plaquemines facility, are nearing record gas flow levels, contributing to the supply increase. This shift in supply dynamics, coupled with warmer-than-normal weather forecasts for most of December, has led to a cooling off in natural gas prices after they hit a 13-month high.
The market's response to these developments is further complicated by the unusual pricing patterns observed in the futures market. The "widow maker" spread, where the April contract is priced higher than the March contract, suggests a shift from the typical winter pricing peaks. This contango situation indicates that the market may have already seen its peak for the year, with some analysts suggesting that the high prices usually associated with winter could be over before the season officially starts. The combination of increased production, high LNG export levels, and warmer weather forecasts has created a unique landscape for natural gas prices, requiring stakeholders to adapt quickly to these evolving conditions.
The ProShares Ultra Bloomberg Natural Gas ETF (BOIL) is currently priced at $44.39, reflecting a 2.82% decrease from the previous close.