Today was a relatively quiet day on the natural gas front, with the August contract closing just two ticks lower than yesterday. 

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The weekly move has been decidedly lower, however, thanks in large part to the shift cooler in the weather pattern for the balance of July, bringing "blues" to the 6-15 day forecast maps. 

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This is a stark contrast to the heat we've seen much of this month, which prompts us to take a look at how the weather has played a role in the price action of natural gas so far this summer. Typically, the "weather factor" carries much more weight in winter than in summer. This is because of much higher gas demand in the winter months. The difference between a very cold winter and a very warm one can account for roughly 2 tcf in terms of natural gas demand, while in summer, the difference in demand between a cool summer and a top-end hot summer is only around 25% of that, in the realm of 500-600 bcf. 

This summer, at least so far, has been a case where weather's influence has been more evident in price action, which can happen in cases where we do not have a notable paradigm shift in the supply/demand picture in the middle of the season. Here is the demand profile since 5/15/19, using the departure from normal in Gas-Weighted Degree Days (GWDDs) as the measure. This includes our 15-day forecast as well. We've highlighted the period where demand ran consistently below normal, as well as the recent weeks where demand has been consistently above normal. 

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As we look at prices, we see that, sure enough, when demand was consistently below normal, the direction of price action was generally lower, and as demand has remained consistently above normal, the direction of price action has generally been upward. 

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Of course, we do have the big drop this week while the pattern is still hot, but as we mentioned, that is the market pricing in the cooler forecast changes for the balance of July. 

Now, we are not making the case that one should base trades only around weather-based strategies in summer. as results will not be this clean, typically. But is definitely an important piece of the puzzle.