It was January contract options expiry for natural gas futures today, though excitement was certainly not what it could have been should December have verified colder. On the day the January contract settled up a bit more than 2% on lingering long-range cold risks following heavy selling Monday. 

(Click on image to enlarge)

Options expiry seemed to play a role, while loosening balances and expectations for a bearish EIA print to be announced Friday eased concerns about low storage, explaining why the March contract lagged. 

We accordingly saw a decent bounce in the January/March contract spread today despite only a modest January rally. 

Today's intraday bounce was not particularly surprising, prices under $3.5 were "undervalued" headed into options expiry given long-range cold risks. When we wrote this gas prices were down 3% on the day, and we sat bounce and watched them bounce solidly over $3.5 through the day. 

Prices were aided intraday with GEFS weather model guidance that showed widespread cold risks in the long-range (image courtesy of Tropical Tidbits). 

Meanwhile, we saw recent balance dynamics as potentially explaining much of the price action since last Friday.