US Natural Gas prices have added +11.47% over the last month and are up +33.10% over the year to date. Though prices are well off of the peak seen on December 5th. In fact Jan 26 futures- the current front month contract are some -12.0% below the spike seen in the first week of December.
It’s not uncommon for natural gas prices to spike higher in winter months, particularly if the meteorologists forecast a cold snap.
Gas prices are sensitive to temperature changes simply because when its cold people tun their heating up. Conversely prices drop if the weather forecasters point to milder temperatures.
And that’s what happened on Monday
“Jan Nat-Gas prices plunged on Monday after updated weather forecasts showed US temperatures warming mid-month, potentially curbing Nat-Gas heating demand. Forecaster Atmospheric G2 said that the forecast shifted slightly colder over he eastern and southern US for December 18-22, but noticeably warmer elsewhere. Also, other weather models support a broad-scale warmer risk as cold air is confined to Canada.” Barchart.com
From a seasonal standpoint December is a flat month, on average for Nat Gas prices with January Futures losing a little over -0.360%.
That contrasts sharply with the performance of UNG the US Natural Gas Fund, an ETF that tracks the price of natural gas futures. UNG experiences an average decline of -8.13% in December, and has produced negative returns in the last month of the year 68.75% of the time, over the last 15 years.
The differential comes about because of the holdings that UNG has, and the shape the Natural Gas futures curve for example May 2026 futures trade at around $3.75 versus $4.84 for January.
If you want to trade Natural Gas or Nat Gas related equities then it make sense to keep and eye on US/ North American weather forecasts and temperatures.
