U.S. natural gas futures traded close to backwardation whereby front-month prices are at a premium to the later deliveries, as cold weather boosts demand for the fuel for immediate delivery.
The gas futures market settled in contango at the end of last week, whereby prices are higher for later deliveries. First- and second-month natural gas futures last settled in backwardation on July 28, and have occasionally been in backwardation in intraday trading in late November.
Gas for January delivery at the Henry Hub in Erath, Louisiana, traded a $4.441 a million British thermal units while the February contract was at $4.444 in electronic trading on the New York Mercantile Exchange at 8:56 a.m. local time.
The difference between the first and second month contracts narrowed to zero earlier today, according to spread transactions on the Nymex.