Natural gas futures for January delivery will be more expensive than December’s on higher gas demand, Citigroup Inc. said.
Investors should buy the January contract and sell the December one as the spread between the two contracts will increase after reaching 8.8 cents on Aug. 8, the lowest level since June 10, Edward Morse, an analyst at Citigroup, said in a report released Aug. 16.
The spread is among the lowest in the past 10 years at this time of the year, he said.
“It appears that the spread typically widened late in the summer,” said Morse. Prices will rise as demand increases, “particularly in January when demand is the highest,” he said.
Natural gas for December delivery fell 3.9 cents to $4.274 per million British thermal units at 9:55 a.m. on the New York Mercantile Exchange. The January contract declined 3.9 cents to $4.378.
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