Natural gas has been incredibly, frustratingly range-bound this week. The weekly range is only around 10 cents, and 6 of the last 8 trading sessions have seen prices settle less than 1% away from the settle price the day before. Despite trading at significantly higher prices than a few weeks ago thanks to bullish EIA data amidst slowing production, the volatility has been temporarily sucked out of the market, and EIA data right in line with many estimates today (including ours) did not help much. As seen below, strong resistance remains around $2.63 with support from $2.5-$2.55. 
 

So, which way might prices break? First, it is relatively unlikely that prices make a significant move on Friday; prices on Friday typically retrace any major moves on Thursday or remain range-bound, as was seen last week when prices declined slightly after massive gains on Thursday. That makes it seem unlikely that any significant moves will come, especially when weather forecasts have been relatively neutral through the week, not providing significant catalysts. 

However, there is an increasingly strong argument for bearish weather risk increasing in the next month. Most climate models have shown that by as early as July we could see La Nina conditions developing, which would significantly increase heat risk. Yet current observations are showing that may not be the case. As seen below, sea surface temperatures along the equator in the central and eastern Pacific Ocean were significantly warmer than average today. The El Nino is flaring back up. 
 

This recent flare up of warmer waters can be more clearly seen here. That animation shows the trend of the last few days, though the trend is likely already slowing down. First, it appears that warmer waters across the northern Pacific, associated with a positive Pacific Decadal Oscillation (PDO), may be slowing the development of the La Nina more than most models had expected. While the pattern in the next couple of days does have some similarities to a La Nina, in the medium-term the trough swinging across the East is a sign that La Nina conditions are far from locked in. As seen below, the most recent GFS ensembles show that next Thursday cooler weather will overspread most of the East. 
 

This should in no way be construed to imply that a La Nina is not coming. As we have shown before, Upper-Ocean Heat Anomalies are decently negative, an indication that below the surface ocean waters continue to cool rapidly. 
 

Sub-surface temperature anomalies also indicate widespread cooler water temperatures below the surface, which will ensure any warming at the surface from shifting winds (or other factors) will be short-lived. 
 

Finally, the Atmospheric Angular Momentum (AAM) is trending negative while the Global Wind Oscillation (GWO) trends into Phases 2 and 3, an indication that the easterlies will be strengthening (westerlies weakening) making La Nina-like conditions increasing likely. 
 

Yet the AAM is forecast to be less negative than 5 days ago, as seen from this 120-hour old forecast from the GFS ensembles. 
 

All of this taken together simply means that the onset of La Nina conditions may be delayed longer than expected. This could increase cooler risk across the East into July slightly more than some climate models are showing, though the consensus is still overwhelming for cooling demand to be above average for the month. Still, this El Nino flare-up could have consequences if it ends up being sustained for a few weeks, and we should see our weather guidance begin to pick up on it in the coming days. These types of flare-ups are not uncommon, and if SSTs cool rapidly over the weekend we may see little to no influence on our weather patterns. If this trend has more staying power than expected, however, that is when we could begin to see market-moving impacts.