The front of the natural gas strip took another leg lower today as short and medium-range forecasts continued to warm. The March gas contract ended up settling down a bit over 2% from where the February contract expired yesterday.
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Losses were most significant again at the front of the strip, but we saw summer gas lag decently on the day as well.
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Still, the April/October J/V spread settled at its recent lows.
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Part of this weakness was due to overnight warmer model trends, as seen in our Morning Update for clients here.
Weaker cash prices did not help either, as Henry Hub cash lagged on the day even with severe cold in the Midwest.
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Meanwhile, traders began to position for tomorrow's EIA storage number, where we are expecting a larger withdrawal than reported last week despite a smaller draw in the East as implied by smaller DTI/TCO draws.
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Moving forward, it should be a busy day tomorrow as traders react to the first of a series of larger storage withdrawals to be announced by the EIA and process what are diverging trends between medium and long-range forecasts.
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