Gas Creeps Higher On Colder Late January Forecasts

The February natural gas contract logged another small gain today, ticking higher by about half a percent as forecasts continued to trend slightly colder later in January. 

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natural gas commodity weather

Like yesterday, the March contract was the weakest on the day while we saw significant support from later 2019 contracts with production still off highs. 

natural gas commodity weather

Accordingly, the March/April H/J spread continues to tick on lower. 

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natural gas commodity weather

This came despite some colder trends in long-range forecasts, as shown by the arrival of Week 2 cold risks and far fewer warm risks on Climate Prediction Center forecasts this afternoon. 

natural gas commodity weather

These trends were likely, as we held a "Slightly Bullish" sentiment for the day and highlighted that Week 3 trends were likely to be bullish with 12z weather model guidance likely to add GWDDs. 

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natural gas commodity weather

natural gas commodity weather

Meanwhile, long-range CFSv2 climate guidance, which typically is warm-biased, is showing modest cold risks across the East Weeks 3-4 as well. 

natural gas commodity weather

Traders are weighing these weather trends against expectations for tomorrow's EIA print, where we expect a decently larger than last week (but still loose) storage draw to be announced. Gas Weighted Degree Days were decently below average last week, so this should not be a surprise. 

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natural gas commodity weather

 

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