Natural gas markets are experiencing heightened volatility as traders anticipate the release of the U.S. Energy Information Administration's (EIA) storage data, which is expected to reveal a significant withdrawal due to the coldest temperatures this winter. The eastern two-thirds of the United States have been much colder than normal, driving up heating demand and pushing February Nymex natural gas futures higher. Analysts predict a storage draw of 255-260 billion cubic feet, well above the five-year average, which could further bolster natural gas prices. Additionally, an Arctic Blast forecasted to hit the Midwest, South, and Texas next week is expected to sustain high demand, adding upward pressure on prices.
In Europe, a sharp increase in liquefied natural gas (LNG) imports is being driven by a 15% year-over-year drop in gas inventories, which is adding bullish pressure on U.S. export flows. The heightened demand for LNG in Europe, coupled with the anticipated cold snap in the U.S., is contributing to the bullish sentiment in the natural gas market. Despite these factors, U.S. natural gas production has declined due to freeze-offs, further tightening supply and supporting price increases.
The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) is trading at $31.06, reflecting a 0.19% increase as of 10:00 AM ET on January 16th.