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U.S. Natural gas prices had rebounded by nearly 4% as of midday Wednesday after five consecutive days of sell-off when it became clear that predictions of a supply squeeze were wrong.
Henry Hub natural gas futures were trading at $4.145 at 1.38 p.m. EST, up nearly 4% on the day, after gaining as much as 5% earlier in the day.
For the five days prior, Henry Hub natural gas futures had been trading below $4 and had lost one-quarter of their value.
Now, prices will be waiting on Thursday’s weekly gas storage data from the Energy Information Administration (EIA).
Henry Hub prices peaked in August at $10, still enjoying $7 per mmBtu earlier in December. Overall, natural gas futures managed to close out the year up 22%, largely because the market was anticipating undersupply and more consistent severe cold.
When neither of those things emerged, prices plunged at the beginning of the New Year.
As of Wednesday, the consensus seemed to be emerging that natural gas futures had been oversold, allowing them to recoup some losses.
“NYMEX gas futures prices have slowed their capitulation, and signs of being oversold are emerging,” Houston-based energy markets consultancy Gelber & Associates said, as reported by Investing.com UK.
Nonetheless, Gelber remained bearish in terms of supply and demand, citing “projected daily natural gas storage withdrawals will remain bearish versus the five-year average through at least January 12”.
In Europe, natural gas prices continued their plunge on Wednesday thanks to a milder-than-expected winter. On Wednesday, the Dutch TTF front-month gas futures dropped to under $75, representing only half the price it was in early December.
Reuters reports that Europe is now seeing an increase in inventories that could actually “overwhelm” storage.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com