Production Dip Keeps Gas Firm

The February natural gas contract logged a small gain on the day, with colder mid-day weather model runs being canceled out by warmer European model guidance into the settle and limiting the gain to just under 1%. 

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This February gain was in line with what we saw for most contracts in 2019, and it was actually the summer contracts that were the strongest on the day. The March contract meanwhile logged a small loss. 

The result was a large move higher in the February/March contract spread back to recent highs. 

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Meanwhile, the famed March/April H/J spread actually fell to new lows on this March weakness today. 

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Prices were initially quite strong overnight.

This followed a turn in our sentiment to "Slightly Bullish" from yesterday, which verified well as prices shot over $3 multiple times today. 

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Of note was a recent dip in production since the new year, which has kept supply more limited. After ramping into the new year, year-over-year production growth is only sitting around 9 bcf/d right now. 

This could help increase upside in gas prices if it persists and weather forecasts trend colder.