Natural gas markets are experiencing a notable shift as US natural gas futures have recently risen to over $3.7 per MMBtu, marking the highest level in over a year. This surge is driven by expectations of increased global LNG demand and a forecasted cold front in the US by mid-January, which has led to a significant 18 billion cubic feet increase in demand forecasts. Additionally, the Energy Information Administration (EIA) reported a substantial draw in gas storage for the second consecutive week, intensifying the anticipated start of the withdrawal season. The geopolitical landscape is also influencing the market, as the decreasing likelihood of Europe receiving Russian gas through Ukraine has prompted investors to take long positions in LNG, further boosting demand for US exports.
Despite these bullish factors, the natural gas market is facing some headwinds. The Nymex January natural gas futures, while initially climbing, have shown signs of slowing their advance ahead of a potentially brief warm-up period. This comes after a four-day rally last week, which saw the contract reach its highest point in 2024. The prompt month contract was trading at $3.759/MMBtu early Monday, slightly above Friday's cold-driven settle. However, the market's momentum appears to be tapering off as traders brace for a temporary moderation in temperatures.
The ProShares Ultra Bloomberg Natural Gas ETF (BOIL) is currently priced at $48.57, reflecting a 3.55% decrease from the previous close.