U.S. natural gas fell to a one-week low on better weather forecasts

U.S. natural gas futures fell 4%, hitting a one-week low Wednesday, driven by expectations of less-than-cold weather in November. The odds of the Freeport liquefied natural gas (LNG) plant in Texas not returning to full capacity this month are good. This is due to the U.S. company having failed to file with federal regulators for operation restarting. 

The demand for natural resources is projected to rise once the plant is back into service. Several tankers are scheduled to transport LNG from the Freeport facility, Refinitiv said. Three carriers have been near the plant, while the other two are expected to arrive by the end of November. 

Futures contracts for the next month dropped by 4.4%, particularly, by 27.3 cents. That brought their value up to $5.865 per million British thermal units (mmBtu), considered the lowest level since Nov. 1. The Volatility Index (VIX) has skyrocketed based on futures price movements, which have varied within 5% over the past couple of weeks. The index peaked despite hitting a record high back in October 2021. 

Volatility is seen to estimate the upcoming price changes in the market. Analysts at energy consulting agency Gelber & Associates believe that market volatility is determined by the following reasons: futures fell sharply at the end of last week, following some hedge funds that started to buy them in order to remove shorts.

As Gelber & Associates stated, these actions enabled more profits for hedge funds. The forecast is showing that the winter months are no exception to market volatility either.