Energy prices were mixed on Monday - Natural gas futures in New York exploded thanks to a favorable (short-term) forecast from the weatherman.
Markets for the liquids in New York and London tanked as the dollar rallied. Meanwhile, in the days ahead we anxiously await to see how the market wants to digest the U.S. EPA’s move to regulate GHG’s (Green House Gas) emissions.
Natty futures surged yesterday on forecasts of a spike in heating demand in key gas furnace market areas in the Midwest and East. Spot gas for January delivery jumped 38½ cents or 8.1%. That makes yesterday’s gain one of the largest for delivery into January in the history of the NYMEX contract.
In fact, of the roughly 2,350 positive daily closes for January Henry Hub futures trading since 1991, we estimate only 24 closes were greater than yesterday’s return. Therefore, it is obvious to us here at that yesterday’s gain had more to do with the illiquidity typically associated with December trading than some expected cold weather over the next week-and-a-half.
As far as today on the NYMEX goes, our 5.179 daily inflection point is currently holding. Should it fail, we will look for a push towards our 5.387 intra-day.
Nota Bene! Retail gasoline prices moved higher last week as did the year-on-year premium. Per the EIA, as of Monday, December 07th, prices in the U.S. rose by 0.2% or 0.005 cents to $2.634 a gallon. More importantly, the premium to a year ago increased to 93.5 cents or 55%. Meantime, on-highway diesel prices fell for a fifth straight week, down 0.003 cents or 0.1% to $2.772 a gallon. However, the year-on-year premium increased to 25.7 cents or 10%.
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Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.