It is no secret that this October has been a very warm, very low demand month, resulting in larger-than-normal weekly natural gas injections, thanks to the strongest warmth coming where, typically, we see cool enough weather to start racking up HDDs.

Month-to-date temperature anomalies:

Natural gas demand, as measured by Gas-Weighted Degree Days (GWDDs) is basically equal to 2016 for the lowest October demand total in our historical dataset, dating back to 1980.

Longer term guidance had been strongly favoring warmer weather to continue, as well, with the CFS, for example, consistently forecasting a very warm November, which would be unkind to natural gas bulls.

Toward the end of last week, however, we began to pick up on a rather interesting "blocking" pattern, with anomalous upper-level ridging in the polar regions from northern Canada over to Greenland, often a colder signal in the eastern half of the U.S. This feature had not resulted in much of change in forecast demand back on Friday, but was enough for us to go against the grain, diverging from the warmer model guidance and shift our sentiment to the bullish side of the spectrum in our Friday afternoon report sent out to clients, given what we perceived as colder risks.

Indeed, the forecast did shift colder, as we picked up 11 GWDDs in our forecast compared to Friday's outlook.

While not strongly cold, in an overall sense, it marked a major step change away from the massive warmth that had dominated the last several weeks, something that the natural gas market, which had clearly been fading colder risks, took note of, rallying more than 60(!!!) cents vs Friday's closing price in the prompt month November contract.