I wrote yesterday that while the squeeze into contract settlement in natural gas was on low volume, it was the kind of thing that can change the psychology of the market. Compound that with cold weather, a US court canceling a drilling auction and Ukraine worries and there is a sudden bid in natural gas.
The March contract is up 10% today to $4.74. (update: now 14%)
This chart is a bit wonky because of the 70% squeeze yesterday but if you ignore that, there’s a 20% rally since mid-week.
Some tectonic shifts in the back of the LNG curve. 5yr+ contracts used to backwardate to US$6/Mcf; (we also spent some time at that price in the front back in 2019).
Some thoughts. 🧵 pic.twitter.com/wWfWWXqW5i
— Jamie Heard (@JamieHeard5)
Meanwhile, oil doesn’t want to be left out of the party. WTI is up $1 in the past hour, hitting $88.74 before giving back 50 cents.