Natural gas futures are plummeting on Tuesday, and market analysts are not sure what is happening. Natural gas prices had been holding steady around $5.50 to kick off the trading week, but the so-called bridge fuel plummeted as much as 10%. Is this the end of the bull run, or an anomaly for the energy commodity?
December natural gas futures cratered $0.443, or 8.05%, to $5.062 per million British thermal units (btu) at 15:56 GMT on Tuesday on the New York Mercantile Exchange. Despite prices crashing on Tuesday, natural gas is still up 100% year-to-date.
Market analysts agree that there are so many factors unfolding across international markets that it is challenging to determine what is happening.
On the weather front, there have been no drastic changes to the American and European models. Early forecasts from Nov. 19 to 21 show temperatures shifting slightly cooler.
Industry projections suggest that there is some light demand unfolding right now, but this could quickly transition to strengthening demand on chillier temperatures, particularly on the east coast of the United States.
Looking ahead to the US Energy Information Administration’s (EIA) weekly storage report on Wednesday, industry experts are predicting a domestic supply build of 15 billion cubic feet, with some bullish expectations on the higher side of 25 billion cubic feet.
Last week, US inventories witnessed a significant increase of 63 billion cubic feet.
“This could be important because we expect the natural gas markets are watching December weather forecasts closely, and the onus is on cold to come through to justify much higher year/year prices,” NatGasWeather said in a note.
In other energy commodities, December West Texas Intermediate (WTI) crude oil futures jumped $0.70, or 0.87%, to $82.64 per barrel. January Brent crude futures rose $0.32, or 0.38%, to $83.75 a barrel. December gasoline futures tacked on $0.0244, or 1.05%, to $2.3466 per gallon. December heating oil futures edged up $0.0161, or 0.65%, to $2.4836 a gallon.

