Natural Gas Prices On The Rampage As Inventories Plunge

Last week natural gas made news after soaring past the $6 level in response to another bout of cold weather in the country.

According to Bloomberg, inventories are already the lowest in a decade, and the cold blast could cause a further drawdown of stocks.

“A much colder than normal winter sharply drew down gas inventories, pushing the expected end-of-March storage below 1-Tcf, which was last seen in 2003 when March prices spiked to $9.5,” says a research note from Citi analysts Anthony Yuen, Edward L Morse, Aakash Doshi, Seth M Kleinman, Eric G Lee, Christopher Main and Xing Xing.

Scarcity pricing!

The chart below shows the trading action last week in natural gas futures for the March contract. Note how prices...