Natural gas holds gains after reaching 8-year high

Bloomberg

Natural gas took a breather after its biggest gain in eight years as forecasts for lingering US cold spurred concern supplies may not be enough to meet winter demand.
Gas for December delivery eased 3.1 percent in Asia after surging 18 percent to settle at $4.837 per million British thermal units, the highest since the “polar vortex” of early 2014 that spread an Arctic chill to the Midwest and East. The volume of trading on the New York Mercantile Exchange was nearly triple the 100-day average.
Prices have been driven by “a sharp cold revision in the winter weather outlook,” said Devin McDermott, a commodities strategist at Morgan Stanley. “We see modest downside from here assuming current weather forecasts, but a very wide range of potential short-term prices.”
Gas surged this month amid concern that stockpiles, at a 15-year seasonal low, won’t be enough to help meet winter heating needs, even as production hovers near a record. In North America, gas stowed in underground aquifers and salt caverns in summer months is used to supplement supplies pumped from wells during winter.
The premium for March 2019 gas over the April contract jumped as high as $1.745, the widest in data going back to 2015. The March-April spread, dubbed the “widowmaker” for its volatility, is an indicator of how precarious supplies may be at the tail end of winter.
Domestic and foreign demand for American gas has climbed to all-time highs. Cheniere Energy Inc said it started producing liquefied natural gas at its new $15 billion Corpus Christi export terminal in Texas, the third such plant to begin operating in the continental US. Gas is also climbing amid turmoil in international crude markets, where US benchmark prices snapped the longest run of declines on record.