NATGAS Natural Gas Weekly Chart; Natty Gas Futures Go Sub 2

Natural gas futures continue to plummet and remain in the 3-year downtrend. Natty is beaten like a rented mule. It was taken to the shed out back and roughed-up, slapped-around and kicked in the face. Natural gas prints 1.99 on Friday, 1/17/20, the lowest since 2016 four years ago; a 1-handle. Folks that have gas furnaces in their homes jump off the sofa cheering the drop in natty (monthly utility bills are lower)

A mild winter is occurring thus far. The commodity and agriculture analysts always have the best weather forecasting information available. Ditto the oil patch. So price drops as January moves along towards spring. Construction continues in much of the country with crews taking advantage of the mild winter.

So demand is not the greatest with the mild winter and at the same time supplies are bulging. The gas companies have been drilling more wells but are losing the battle in the natural gas arena as prices tumble lower. The winter heating season is a large user of natural gas. Time moves along so quickly that traders are already starting to focus on the natural gas season lull coming in the spring. After that, perhaps a hot summer will increase demand as the air conditioners go full tilt.

But let's get more sophisticated than that elemental Economics 101 discussion. Let's talk smelters. How about aerospace. Maybe auto. These are big producers and users of aluminum. Aluminum smelters require boatloads of power to run the furnaces and other equipment. This electrical power generation is typically produced with natural gas plants. If natty gas price is falling away into oblivion, with gas coming out our ears, with nowhere to store it anymore, that means that something may be wrong in the aluminum sector.

The aerospace and automotive industries are large users of aluminum so there may be early warning signals that demand in these important job areas is falling away. Ford uses the aluminum body truck now which should increase some demand. Also, natty plants have been replacing coal plants so what does it meant that the natty plants are no longer seeing the prior energy demand? It means that industries are not running their machines.

Natty price is at the multi-year low from 2016, which also goes back to 2012 and also back to 2002, so these prices are at two-decade low levels. Three cheers if you own a gas furnace! Hip, hip hooray! However, if you work at an aluminum smelter, at a natural gas power plant, for the natty gas drillers, for an aerospace parts supplier or at an automotive company, there may be a pink slip in your future. Save your money. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.