Mikkel Rosenvold
11 weeks ago

Mild february weather leads to this surprising development in natural gas prices

How does benign weather affect natural gas prices? And how could you trade it?

Last week, the energy sector threw investors a curveball reminiscent of the early pandemic days. Henry Hub's prices plunged to levels not seen since the Covid-19 outbreak in spring 2020, stirring the market pot. "Amidst a benign weather pattern in the US following January's cold snap, Henry Hub hits lows mirroring the 2020 Covid crisis," explains energy market analyst Ulrik Simmelholt in a recent article.

Investors, spotting a potential turn, are itching to bet against the tide. "As contrarians, the current lows are too tempting to resist, echoing the sentiment that it 'almost can’t get any worse' - a risky mantra for the bold-hearted," says Simmelholt.

However, the natural gas market is on edge, deterred by high volatility. "With the 3-month implied volatility soaring past pre-energy-crisis averages, speculative bets on natural gas are far from being 'cheap lottery tickets,'" underscores the cautious stance among traders.

Shifting gears to crude oil, the narrative brightens. Simmelholt expands: "Crude oil prices tease January highs, with market sentiment gradually tilting bullish," illustrates the market's changing winds. The discussion on the 14-day RSI and a bullish outlook based on price momentum and positioning "signals a growing confidence among traders to increase their long positions," offering a glimmer of optimism in an otherwise uncertain market landscape.

This blend of caution and anticipation in the energy sector underscores the volatile dance between weather patterns, market speculation, and strategic positioning, capturing the attention of investors and speculators alike.


The information provided by this Site is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.

More News

3 days ago Europe Market Open: May 17, 2024 - European Stocks Start Lower Daily update from the European market open.
3 days ago Will Europe cut rates before US? Analyst Ulrik Simmelholt from Steno Research argues that the ECB should initiate rate cuts without fearing wider real rates spread with the USD, emphasizing the importance of commodity prices and energy dependencies over monetary policy in determining Euro strength.
3 days ago Crypto, Currently: May 17, 2024 - Mixed Signals in the Crypto Market Daily update the cryptocoin market.
3 days ago FX Daily: May 17, 2024 - Key Currency Movements and Analysis Daily update from the foreign exchange markets
4 days ago China Exporting Inflation Again: Global Markets on Alert Analyst Andreas Steno from Steno Research warns that China's rising industrial production and strategic resource stockpiling could trigger global inflationary pressures and impact market dynamics.
4 days ago EU Designates Booking as Gatekeeper; Opens Investigation Into X EU cracks down on Booking under Digital Markets Act, investigates other tech giants.
4 days ago Freddie Mac Proposes Unleashing Trillions to Stimulate US Consumption As U.S. excess savings diminish, Freddie Mac's new proposal might unlock vast consumer potential—could this be the spark for the next economic boom?