Natural gas futures plummeted 11% in the U.S. as forecasts shifted warmer through the middle of next month, allaying concern about tight domestic supplies amid a global shortage of the heating fuel.
The expiration of the December contract last week amplified the market’s volatility. Prices closed 7.5% higher on Friday as traders rushed to close out bearish positions before the contract rolled off the board. Contracts for January delivery fell 62.3 cents to settle at $4.854 per million British thermal units in New York on Monday.
Since late summer, volatility in gas prices has stayed well above the average for the past decade even after a drop from last month’s peak as traders try to gauge whether winter cold will strain inventories.
Late-autumn cold in Europe and Asia has sparked fears that global gas shortages will worsen as nations struggle to refill stockpiles. But so far, there’s little sign of a similar situation developing in the U.S., even as shale producers keep a lid on output and the country’s exports of liquefied natural gas surge to a record. U.S. gas stockpiles are only 1.6% below normal for the time of year.
The so-called widowmaker spread between March and April futures, essentially a bet on how tight inventories will be at the end of the northern hemisphere’s winter, shrank to 41.5 cents, the narrowest since June, after widening to $1.909 last month.
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