It was another red day in the natural gas market, as prices initially rallied overnight on colder weather model guidance but were pulled back lower on weaker physical prices. A bearish EIA print then helped the March contract settle a bit more than a percent lower.
We can see how the whole strip made a solid leg lower that was actually led down by later contracts.
The result was that the March/April H/J spread actually ticked higher on the day despite all 2019 contracts logging decent losses on the day.
At first, prices were strong as we added some GWDDs overnight, as we showed in our Morning Update.
Afternoon weather model guidance trended colder with most models increasing cold risks in Week 2.
Yet EIA storage data came out incredibly bearish, with the EIA announcing only 173 bcf of gas was withdrawn from storage.
We were looking for a draw of 189 bcf and even then were slightly below the market consensus that was a bit higher. This print was very loose on a weather-adjusted basis, even when taking into account the Martin Luther King Jr. holiday.
Tomorrow traders will continue reacting to today's loose print while also looking ahead to the weekend and seeing if any cold risks can persist.
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