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Highest NYMEX Natural Gas Expiration in Four Years: Tough Risk Management Lesson for Some

Posted by Jennifer Chang on Jan 31, 2014 5:16:00 PM

On January 2, 2014, the NYMEX Henry Hub NG February-2014 (front month) contract settled at $4.321/MMBtu, and on January 29, 2014, the contract expired at $5.557/MMBtu (see chart below). This was the highest expiration settlement price for the front month in four years. During the month of January, the front month contract rose $1.24/MMBtu, or 28.6%. The chart below shows that on expiration day (1/29/14) the front month price posted a $0.52/MMBtu or 10% gain for the day. The March 2014 contract followed suit and rallied almost 11%, settling at $5.465/MMBtu. During the expiration day, weather forecasts turned colder than previously expected, so market players that underestimated demand rushed to the market and were clobbered in a short squeeze.

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Topics: Weekly Energy Insights, natural gas, Acclaim Energy Advisors, Energy Solutions, demand response, energy risk management, energy, energy reliability, energy procurement, energy regulations, reliable energy, energy management, energy supply, energy savings, energy management consultants, energy sourcing, U.S. energy, energy costs, curtailment, power generation, energy price spikes, Price Spike, Emergency, energy blog, Natural Gas Supply, NG, gas gross production report, price direction, NG contract, NYMEX, price volatility

   

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