The weather outside is frightful… | FT Alphaville

The weather outside is frightful…

(…but the natgas-fire is so delightful.)

They’re calling  it the ‘storm of the decade‘ in the United States.

The winter tempest that swept through the East Coast over the weekend, bringing heavy snowstorms and sub-zero temperatures, was still making its presence felt on Tuesday.

This was particularly the case with US retail sales.

According to Reuters, tracking firm Planalytics estimated the chilling weather could have cost US retailers up to $2bn in lost sales. On the upside, online retailers still guaranteeing delivery before Christmas most likely benefited as consumers turned to shopping via their computers to avoid the harsh winter conditions outside.

The Washington Post, for example, reported retails sales over Friday and Saturday jumped 23 per cent on the year, according to data from Coremetrics.

But there is another big demand upsurge traditionally associated with cold weather: natural gas use.

And while there was indeed a significant spike in nat-gas futures in the week running up to big white-out:

Natural Gas futures - FT

…compared to previous years, prompt prices remained extremely muted. A fact which hardly spells an oncoming bull trend in natgas prices, according to Nick Campbell, an analyst at at energy consultancy Inenco. As he told FT Alphaville:

…given this is the most bullish in terms of fundamentals in terms of weather well below seasonal norm, nat gas in US is firming on the back of the “storm of the decade” yet day ahead yet to break through 36p, it’s all about LNG and the impact it has had in terms of balancing the system and the impact it has had on the use of storage which even with its recent usage its still higher than last year peaks.

Meanwhile, as Stephen Schork of the Schork report observed on Tuesday:

Natural gas prices began the week with a whimper instead of a bang, closing yesterday 1.8% lower at 5.625. That marks the third consecutive day the bulls have failed to break out higher. Of course, prices remain at their highest point since October, when they actually crossed 6.00, so we are not taking yesterday’s trades too seriously. After dipping in the morning, prices couldn’t break through support at 5.630, hovering around 10 ticks above.

In other words, even the storm of the decade has failed to rebalance the natural gas market to previous norms. And that is quite something.

Related links:
US natgas spikes 7%
– FT Alphaville
More UK natgas glut talk –
FT Alphaville