The US natural gas front-month futures contract jumped 6 percent on Tuesday, bringing it close to a four-year high, which caused futures for calendar 2019 to rise to a near 22-month high: Calendar 2019 jumped over $3/mmBtu, its highest since mid January 2017.
Futures were higher in every month through June 2019, with the biggest increases in the upcoming winter months of December 2018 through March 2019. Front-month gas futures rose as high as $4.067 per million British thermal units (mmBtu), their highest since late November 2014, after the latest weather forecasts pointed to even colder weather next week than the frigid temperatures projected just a few days ago.
Traders said that cold will force US utilities to start withdrawing gas from storage caverns that are already around 16 percent below normal for this time of year, prompting concerns of possible gas shortages in some parts of the country later this winter. That was the fourth time in two weeks the front-month jumped over 5 percent during the trading day, boosting implied volatility, a determinant of an option's premium, to 55.9 percent, its highest since January.
Tuesday's gain put the front-month on track to remain in technically overbought territory for a seventh day in a row, for the first time since December 2016, with a relative strength index (RSI) at 91.1, its highest since December 2013.
An RSI of less than 30 signals oversold, while over 70 signals overbought.
The US Natural Gas Fund, an exchange traded fund designed to track movements in gas prices, was up over 3 percent to $32.62, its highest since January 2017.
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