Exploding Cash Pulls April Gas Higher

What started seemingly like a relatively slow day in the natural gas space quickly turned exciting as physical gas prices shot higher through the morning. Next day Henry Hub cash spent much of the morning over the $3.2 level, pulling the April contract slightly over $2.87 before it pulled back slightly. 

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natural gas commodity weather

The cash-led nature of the rally was clear with the April contract leading through the day with winter eventually catching a bid later in the day. 

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natural gas commodity weather

The result was that the April/May contract approached flat levels, which it has not been at since late January. 

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natural gas commodity weather

This spread is far stronger than it has been at any point in the last several years besides 2014. 

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natural gas commodity weather

In our Morning Update we highlighted that with "near term cold likely keeping cash firm, and stronger prices for next winter, we can test the 2.85 level..." which played out well this morning on cash strength. This was more on our reading of balance and spreads versus overnight GWDD additions, which were not particularly impressive. 

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natural gas commodity weather

Afternoon model guidance was mainly mixed too, showing some lingering cold risks Week 2 despite warmth being able to return in the Southeast. 

natural gas commodity weather

This came as the market shook off what was a slightly unimpressive EIA number yesterday. Now, traders are positioning for the weekend after this cash move pulled prices higher. The Climate Prediction Center sees mixed risks in their long-range forecast; this forecast would look for colder risks in the center of the country with some warmer risks in the East. 

natural gas commodity weather

 

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