The March natural gas contract rallied over 2% today as weather model guidance remained bullish and the EIA announced a slightly larger storage draw last week than expected.
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As has been the theme all week the March natural gas contract was the strongest along the futures curve and led the way higher, buoyed by more cash strength.
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Yesterday in our Afternoon Update we warned about bullish risks today as we expected both a bullish EIA number and more supportive weather model guidance. We reiterated this in our Morning Update today, where again we held Slightly Bullish sentiment.
This worked well as the EIA reported a draw of 177 bcf of gas from storage last week, which was only slightly larger than our estimate of 172 bcf but more significantly above the consensus around 165 bcf.
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As we immediately warned subscribers following the number, we saw this as supportive for the natural gas market as it was solidly tighter than the last few weeks of EIA numbers.
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Cold Week 2 forecasts have continued to support prices as well.
This combination has helped lead a recovery in the April/October J/V spread.
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