US prices dipped today amid profit-taking by traders, after soaring by over 117% in the five days to Monday, Bloomberg has reported, noting the benchmark jumped by 30% on Monday alone.
Last week, gas prices went up by as much as 70% amid frigid weather that apparently took gas traders both in the United States and Europe by surprise. This surprise led to frantic short-covering and position exits at a hefty loss.
Currently, natural gas is trading at over $6.60 per million British thermal units, which is the highest in four years and up from around $3 per mmBtu in December. On Monday, gas prices topped $7 per mmBtu.
Prices in Europe are also up sharply after the cold spell in the United States reduced gas deliveries to the liquefaction facilities along the Gulf Coast. U.S. LNG producers are the biggest suppliers of gas to Europe. ING analysts estimated that gas deliveries to LNG plants were down by as much as 48% in the past few days.
While this happened, across the Atlantic, Europe saw its gas in storage continue to drain at much faster rates than usual. As of Sunday, the latest available data, EU gas in storage was at 44.95%. Germany’s was at 36.77%. Both levels are a lot lower than the average for the last five years.
Meanwhile, U.S. natural gas stocks are quite abundant. Per EIA data cited by the Wall Street Journal, on January 16, gas in storage was 4.8% above the levels from a year earlier and 6.1% above the five-year average for mid-January.
Profit-taking has removed some of the momentum from natural gas markets, but output disruption in the world’s biggest producer and exporter will likely keep most of it going. The question, as ING’s commodities team noted earlier today, is how long the disruption will continue.
