Gas volatility has soared this month as bulls betting on winter supply constraints clash with bears expecting record production to overwhelm demand for the fuel. Prices soared more than 20 percent on Wednesday before tumbling the most on record the following day. Though output from shale basins is at an all-time high, exports have climbed as domestic consumption rises, leaving stored supplies at a 15-year seasonal low.

“We haven’t had this kind of weather in a long time where it gets cold right out of the block in November,” said Tom Saal, senior vice president of energy trading at INTL FCStone Financial Inc. in Miami. “That puts the industry on notice that we are going to need a lot of gas this winter. We could see a lot volatility.”

Eoin Treacy's view

The question is not whether there is enough gas to go around but rather how much of it can get to market in a timely manner. That points to a lack of pipeline infrastructure rather than a lack of basic resources.

Natural Gas is one of the few commodities to have completely unwound its entire bull market advance. The prolific nature of natural gas production from shale wells remains a game changer for the sector which has tended to cap rallies over the last decade. Moves above $5 have failed to be sustained since 2009 so with the price now testing that level the question logically arises, how much higher can prices go?

Volatility has increased over the last week and that suggests some selling pressure is now coalescing near a previous area of resistance. When weather improves or supply increases there is a strong likelihood that prices will come back down.