Natural gas prices didn’t recover from the sharp falls of past months and during December they also declined. Furthermore, during December natural gas prices have unperformed not only compared with recent months’ prices, but also compared with previous years’ price levels. One of the reasons is probably the late arrival of the winter, but it’s only one aspect of the sharp drop in natural gas prices.
What is up ahead for U.S. natural gas prices during the first month of 2012? Let’s analyze the changes in the natural gas prices during December 2011 and provide an outlook for natural gas prices for January 2012:
Natural Gas Prices December 2011- Analysis
First, let’s examine what happened to natural gas prices (Henry Hub) during December: the Henry Hub natural gas spot and future prices declined during most of the month. Even though the Contango (future price premium over spot price) has shrunk during the month compared to previous months, the market remained in Contango. By the end of the month, as the short term futures (January delivery) will expire, the Contango is likely to close, as was the case in November.
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