December natural gas NGZ18, +2.77% dropped by almost 80 cents, or 16.5%, to settle at $4.038 per million British thermal units. That was the biggest single-session percentage drop since Feb. 27, 2003, according to Dow Jones Market Data. Just a day earlier, the contract had jumped to $4.837 a day earlier, the highest settlement since Feb. 26, 2014. Prices on Wednesday had marked a spectacular climb of about 18%—their biggest such increase in more than 14 years—as cold weather forecasts continued to feed concerns about tight U.S. supplies.
Prices now trade less than 9% higher week to date, but they’re still up nearly 24% based on the front-month contract.
Losses on Thursday for the commodity worsened after the EIA reported that domestic supplies rose by 39 billion cubic feet for the week ended Nov. 9. That nearly matched the 38 billion cubic foot rise expected by analysts polled by S&P Global Platts, but came in well above the five-year average increase of just 19 billion.
“With storage certain to be low throughout winter, expect volatility to remain elevated relative to normal,” said Robbie Fraser, a global commodity analyst at Schneider Electric Global Research & Analytics, in a note. “While that means potential for price spikes on any turn towards colder weather, it also means potential to unwind those gains quickly if conditions shift more mild relative to seasonal averages.”