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Why Natural Gas Has Fallen 10% on January 22

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Nov. 20 2020, Updated 1:03 p.m. ET

Natural gas has fallen

On January 22, natural gas February futures fell to an intraday low of $3.13 per MMBtu (million British thermal units), which is ~10% below the last closing level. On January 22, the weather forecast suggests less cold weather for the next two weeks. The forecast might have dragged natural gas prices. In the week ending January 18, natural gas prices rose 12.4% due to expectations of severely cold weather at the end of January.

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On January 22, Reuters analysts expect natural gas demand to fall by 1.3 Bcf (billion cubic feet) per day from the previous forecast of 130 Bcf (billion cubic feet) per day on January 21 for the last week in January. The lower demand would likely be a concern for the natural gas inventories spread, which has contracted in the last few weeks.

Impact on energy stocks and the market

The fall in natural gas prices might be important for natural gas–weighted stocks like Range Resources (RRC), Cabot Oil & Gas (COG), Antero Resources (AR), and Chesapeake Energy (CHK). Broader market indexes like the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) are also impacted by fluctuations in energy commodities.

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