Gas Creeps Higher On Colder Late January Forecasts

The February natural gas contract logged another small gain today, ticking higher by about half a percent as forecasts continued to trend slightly colder later in January. 

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Like yesterday, the March contract was the weakest on the day while we saw significant support from later 2019 contracts with production still off highs. 

Accordingly, the March/April H/J spread continues to tick on lower. 

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This came despite some colder trends in long-range forecasts, as shown by the arrival of Week 2 cold risks and far fewer warm risks on Climate Prediction Center forecasts this afternoon. 

These trends were likely, as we held a "Slightly Bullish" sentiment for the day and highlighted that Week 3 trends were likely to be bullish with 12z weather model guidance likely to add GWDDs. 

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Meanwhile, long-range CFSv2 climate guidance, which typically is warm-biased, is showing modest cold risks across the East Weeks 3-4 as well. 

Traders are weighing these weather trends against expectations for tomorrow's EIA print, where we expect a decently larger than last week (but still loose) storage draw to be announced. Gas Weighted Degree Days were decently below average last week, so this should not be a surprise. 

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