Natural gas prices made another leg lower in today's session, with the November contract (now prompt month) having fallen now more than 40 cents off its intra-day peak a couple of weeks ago, closing at $2.33 today, more than 7 cents off Friday's close.
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Prices tried to hold their own early this morning, down only a couple of cents. Prices wound up declining another five cents over the balance of the day.
Why the continued weakness? A few things stand out. One is that the big rally was never about supply/demand balances having tightened up, so the only thing the move to 2.70 really accomplished in the big picture was to actually loosen balances, with the evidence coming in the last couple of EIA reports. Two, we saw a move higher in production over the weekend, reaching a new all-time high, just under a staggering 94 bcf / day per our dataset.
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Finally, we are seeing a shift in the weather pattern toward below normal demand, as, despite some variability, the overall warmer than normal base state continues to hold in key areas of the nation for natural gas purposes, which is now becoming a bearish signal, as warmth will now mean more of a reduction in HDDs than any gain in CDDs as normal temperatures continue to decline.
Total forecast Gas-Weighted Degree Days (GWDDs):
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