An oil rig and pump jack in Midland. Irving-based Pioneer Natural Resources has a deal to buy Fort Worth-based DoublePoint Energy.(Jacob Ford / AP)
A natural gas trade known as the widowmaker because of its volatility is once again in focus amid concerns about the level of U.S. inventories as the country get closer to winter.
The spread between March and April futures — essentially a bet on how tight supplies of the fuel will be at end of North American winter — jumped to a new high, rising 18% at 2:57 p.m. in New York. In other words, buying drove March futures way above gas for delivery the following month.
The move was just part of the trading frenzy Wednesday as the most active futures contract in New York hit a seven-year high, closing 7.6% higher at $4.91 per million British thermal units. Prices have been boosted by intense heat this summer in many northern hemisphere countries, while in the U.S., production has remained subdued, even faltering recently amid disruption from Hurricane Ida.
With several months to go before the U.S. enters its time of peak consumption for natural gas, there’s plenty of time left for surprises for both supply and demand. The previous spread for the contracts that expired in March and April lived up to the widowmaker moniker: it collapsed in December when it became clear that the winter of 2021 wouldn’t be bullish after all.
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino.
Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.
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