Europe Wins The Battle Of Models

Weather forecasts warmed overnight, and the decrease in expected heating demand through mid-February quickly plummeted natural gas prices. 

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While the entire strip got hit, losses were once again heaviest for the prompt month March contract as the winter premium was priced out. 

The result was the "widowmaker" March/April H/J spread plummeting as concerns about storage levels through the end of the winter greatly eased. 

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It had become clear that once weather stopped providing significant February cold risks prices would plummet. Our Note of the Day to clients last week warned of this, though it turns out the pattern did not quite have the staying power it originally appeared. 

We reiterated this in our on mid-day Monday Note, when it was clear that colder forecasts helped us close the Sunday evening gap. 

It was clear, though, that today weather was finally done propping up the front of the strip, as American model guidance caved and trended significantly warmer in the long-range, as seen below (courtesy of the Penn State E-Wall). 

It was the warmer European guidance that won this battle in the model wars, as it displayed more sizable warm risks all week compared to significant cold on American guidance. The result was a Morning GWDD Forecast Update that was a full 20 GWDDs below yesterday afternoon's, which clients received around 8 AM Eastern. 

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