Natural Gas Futures Surge After January Weather Outlook Predicts Colder-Than-Average Temperatures: Retail’s Bullish
The report also suggested that the cold pattern in the East might hit a peak around mid-month. However, the forecasters expressed uncertainty on how temperatures might evolve toward the second half of January.
FollowNatural gas futures maturing in February 2025 rose as high as 20% on Monday after the weather outlook for January estimated colder-than-average temperatures, boosting demand for the commodity used for power generation.
An updated outlook released Sunday by The Weather Company and Atmospheric G2 said January's temperature forecast has trended colder in the East.
“For the month as a whole, most of the East is expected to have temperatures colder-than-average, from Florida to Maine and parts of the Great Lakes,” it said.
“Specifically, temperatures in the first half of January will likely be much farther below average compared to what the forecast for the month as a whole shows in the eastern half of the country,” the outlook stated.
The report also suggested that the cold pattern in the East might hit a peak around mid-month. However, the forecasters expressed uncertainty about how temperatures might evolve in the second half of January.
“Unlike December, when we were more confident in a warm back half of the month, we are less confident in that occurring in January, given the peak of the cold likely won’t crest until mid-month,” said Todd Crawford, Vice President of Meteorology at Atmospheric G2.
Meanwhile, John Kilduff of Again Capital told CNBC that there could be disruptions in natural gas production flows.
“We are talking [about] bone-chilling, polar-vortex weather, which has caused this spike in natural gas this morning,” he said.
Following the development, the United States Natural Gas Fund, LP (UNG), an exchange-traded security that is designed to track the daily price movements of natural gas, surged over 17% on Monday.
Retail sentiment for UNG on Stocktwits jumped into the ‘extremely bullish’ territory (83/100) from ‘neutral’ a day ago, hitting a one-year high. The move was accompanied by ‘extremely high’ retail chatter.
UNG’s Sentiment Meter and Message Volume as of 12:50 a.m. ET on Dec. 30, 2024 | Source: Stocktwits
Retail chatter on Stocktwits indicated positive takes on the asset’s potential.
Despite the surge on Monday, the United States Natural Gas Fund is still down over 11% on a year-to-date basis.
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