Natural Gas Finally Collapses Lower

The January natural gas contract got hit hard today, shooting over 6% lower as balances loosened on warmer weather and long-range forecasts showed only limited colder risks. 

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natural gas commodity weather

The January contract again logged the largest loss on the day, a testament to the role weather had in pushing prices lower. 

natural gas commodity weather

This has already fit very well with our weekly natural gas sentiment which was "Slightly Bearish." 

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natural gas commodity weather

As expected, weather model guidance was rushing long-range cold risks, with further warm trends in overnight weather model guidance.

natural gas commodity weather

We also saw power burns and other demand loosen today, as yesterday we warned that loosening was likely through the week. 

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natural gas commodity weather

When combined with consistent warm risks through Week 2, this was all the natural gas market needed to sell off significantly. 

natural gas commodity weather

Meanwhile, traders will be paying close attention to tomorrow's EIA print to see how much gas we drew last week, when cold came on late in the week. 

natural gas commodity weather

Our early estimate is that this print will be similar in balance to the one saw last week, as we expect a solidly larger draw thanks to decently more GWDDs on the week. 

natural gas commodity weather

Yet despite storage levels being so low and this draw being rather large, the March/April H/J spread fell off today on those warmer weather trends we had been calling for. 

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natural gas commodity weather

It will certainly be another busy day with gas prices breaking down below the forming pennant, and we expect volatility to again be elevated with another EIA print. 

Disclaimer: To begin receiving both our technical and fundamental analysis of the natural gas market on a daily basis, and view our various models breaking down weather by natural gas demand ...

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