Tuesday, September 25, 2018 at 4:54PM
It was October natural gas contract options expiry day, and though the daily trading range ticked down from yesterday we still saw prices spike higher into the settle at the front of the strip, with the October contract gaining another 1.5%. It was clear that very strong cash prices pulled up the whole strip, with the October/November contract spread spiking significantly again today. The February/March G/H spread also continued to take off today. Today's rally was not particularly surprising, as we mentioned in our Afternoon Update for clients yesterday that, "...we are less confident in any reversal, and see the path of least resistance up towards $3.07-$3.1 for prices." Our Morning Update also outlined that, "...winter prices are solidly more firm today, which is certainly supportive. Lingering cash strength could prop up the front of the strip as well..." It was that strong cash prices that got the whole front of the strip rallying today after early AM declines. Today's rally continuation came even as GWDD forecasts for the next couple of weeks are not particularly impressive as warm risks dominate in the South and East despite a cold Midwest. Meanwhile, it's clear that the market is entering a period of increased pre-winter volatility, with average trading ranges skyrocketing over the past week. With this increased volatility should come increased opportunity, as we have been outlining for clients in recent reports. It's the perfect time to try out a 10-day free trial here to all our weather and natural gas-driven research and see how we can help you take advantage or protect against the wild oscillations of the natural gas futures market.
Monday, September 24, 2018 at 5:03PM
The October natural gas contract appeared to break out higher today, overcoming resistance from $2.98-$3. The October contract led the way higher today as well, as it continues to see strength from strong Henry Hub cash prices ahead of its Wednesday expiry. These gains came despite forecasts for the next two weeks that did not hold quite as much heating demand as they did last Friday. Over the weekend models warmed the South and East more through the first week of October, fitting expectations from our Pre-Close Update last Friday. Climate Prediction Center forecasts this afternoon showed how warmth was more likely Week 2 across the East compared to previous forecasts, confirming our analysis. However, we noticed other trends over the weekend and again today on guidance that indicate a variable, shifting pattern making some of last week's analysis out of date. In our Afternoon Update we outlined our updated expectations for the month of October, with the Pacific providing a number of signs on how the pattern across the US could develop from here. The latest CFSv2 climate model forecast for October shows more cold risks now. Natural gas balances have also been volatile and a major driver of price recently; our Note of the Day looked at the latest weather-adjusted demand and power burns as well as recent supply estimates, including Canadian imports. We broke down how changes in the Week 2-3 forecast and recent balances are likely to drive prices moving forward, providing a holistic view of the natural gas market to prepare clients moving forward. To give all this research a quick look and integrate our research into your method ahead of the winter season, try out a 10-day free trial here.
Friday, September 21, 2018 at 5:03PM
After what has been a very volatile week the natural gas market calmed down today, declining overnight but rallying on continued cash strength and a stronger winter strip this morning and settling near flat. Again today the winter strip supported the prompt month October contract, with the December and January contracts logging the largest gains on the day. Thus the V/F October/January contract spread has continued to widen following the rapid narrowing of the last few weeks. Prices did decline overnight on some slight revisions lower in weather-driven demand forecasts, as we showed clients in our Morning Update. We outlined for clients in our Morning Update that, "...a test of $2.98-$3 into the weekend is not out of the question. Spreads do indicate at least some more support would come if cash is strong with V/F and V/X rapidly widening again." Cash prices remained firm and we saw the October contract move right back into our resistance range, though as we expected resistance easily held even with continued cold risks in the 6-10 Day time period. Into the weekend traders are closely watching colder weather over the next couple of weeks that could deliver the first heating demand of the season, as they attempt to determine whether we see enough GWDDs to keep injections limited and the storage deficit large. Low storage levels have helped keep Henry Hub cash prices strong relative to the prompt month contract, a trend that held this week. In our Pre-Close Update for clients we outlined our expectations for how weather forecasts should change over the weekend and how that would likely impact natural gas prices into next week. We also recapped recent shifts in weather-adjusted demand and explained as well how balances should change over the weekend, updating our natural gas sentiment accordingly. This is the perfect time to give all this weather and natural gas-driven research a look to ensure enough time to integrate it into your method before the peak winter season and associated volatility arrives; try out a 10-day free trial here. .
Thursday, September 20, 2018 at 5:02PM
The October natural gas contract rallied a bit over 2% again today, selling off initially on a slightly larger than expected storage injection announced by the EIA but very rapidly reversing high and rallying through the middle portion of the day. The November contract again helped lead the way higher, leading to another move lower in the X/V October/November contract spread. This came even though the EIA announced that 86 bcf of natural gas was injected into storage, beating a market consensus that was right around the 81-83 bcf level. Our estimate of 83 bcf was not far off, but still a touch too low. This fit in well with the average print of the past 10 weeks after we have seen some loosening recently, as the print was tighter than last week on a weather-adjusted basis. Immediately after its release in our EIA Rapid Release for clients we emphasized that, "we see room towards $2.95 on this tightening short-term," which verified within an hour. Our intraday Note of the Day built on this to highlight the risk for, "...a brief move towards $2.98..." which also verified as prices continued rallying through the day on a supportive strip (and the rally was indeed brief, with selling back into $2.96 from there). The rally was aided by some colder risks in the longer-range on model guidance as well, with Climate Prediction Center forecasts still showing long-range cold risks. In our Afternoon Update we broke down these latest cold changes on guidance for clients, and outlined whether we expected them to stick/intensify and how forecasts are likely to change into Week 3. We also looked at today's spread action and the latest balances to give a holistic view of the natural gas market, providing our outlook on price risk both into the weekend and for much of next week. To give this research a look, and begin receiving all our detailed natural gas and weather analysis, try out a 10-day free trial here.
Wednesday, September 19, 2018 at 4:56PM
After spiking over 4% yesterday, the October natural contract pulled back slightly today, settling down a bit less than a percent. On the day the October contract saw by far the largest loss with the rest of the strip more stable. The result was a decent move back in the V/X October/November spread that has been on a tear as of late. In our Morning Update we warned that, "...a bit more short-term upside with lingering cash strength wins out." However, we highlighted that such a rally was unlikely to be sustained, which verified well on the day. Little of this appeared weather-driven, however, with relatively small overnight GWDD changes. Climate Prediction Center forecasts continued to pick up on the Week 2 cold risks we had been highlighting for clients the last 36 hours as well. Meanwhile, traders are preparing for tomorrow's EIA print, where we are looking for a larger injection than the previous week thanks to far less weather-driven natural gas demand this past week. Gas Weighted Degree Days fell off significantly week-over-week and are the lowest for a week since the past spring. In our Afternoon Update we break down our latest expectation for the EIA print due out tomorrow, as well as what the latest weather-adjusted balances and spread movements signal about forward price risk. Our Note of the Day looked closer at weather-adjusted power burns and Canadian imports while also updating our Week 3 weather forecast and its expected impacts on the natural gas market. To give all this research a look and see how it can help you navigate the natural gas market, try out a 10-day free trial here.
Tuesday, September 18, 2018 at 5:04PM
The October natural gas contract exploded higher over 4% today as cash prices spiked on tight power burns and impressive short-term heat. The October contract again logged the largest increase on the day, but it was closely followed by the November contract. Meanwhile, the move higher in the October/January V/F contract spread continued unabated today. This came as models increased heating demand expectations in the long-range, something which we warned clients in our Morning Text Message Alert at 6:47 AM Eastern saying in part, "[s]mall net demand loss but cold risks may spook market..." Those cold risks became apparent on Climate Prediction Center forecasts this afternoon. Our Morning Update then warned that we initially were, "...looking for some type of cash rally towards the $2.85 level," with that rally certainly occurring but only continuing from there. As we mentioned yesterday, and have been covering closely for clients, a number of nuclear plants remain offline which has increased gas burn relative to the 5-year average. This was a focus of our live chat for subscribers, included in our Trader level subscription. We also published our weekly Seasonal Trader Report with 5-month GWDD forecasts and updated storage modeling. In it we also looked at movement of various contracts along the natural gas strip and discussed how risk appeared skewed heading into the winter along various time frames. To take a look at all this detailed research, as well as our Note of the Day looking at the latest weather-adjusted demand and supply figures and our Afternoon Update breaking down PM weather trends and natural gas expectations into the end of the week, try out a 10-day free trial here.
Monday, September 17, 2018 at 5:03PM
The natural gas market rallied significantly on strong cash prices today as the remnants of Florence moved across the Ohio River Valley and gas demand did not fall off quite as much as some feared from the storm. The role of very strong cash prices was clearly evident along the strip. This fit very well with our Morning Update expectations, where we outlined that, "...we are back to pricing in the cash strength that can be expected over the next several days with GWDDs running so far above average and storage still so low. Cash will likely be aided by Florence demand destruction that was not quite as bad as it could have been across the Southeast too...though a morning cash bounce into $2.8-$2.82 is a strong likelihood it should fail..." We got that morning cash bounce right into that $2.8-$2.82 resistance level, and though prices initially moved above it they declined into the settle right back into it. Short-term heat helped cash prices be particularly strong. This has pulled the V/X October/November spread far above usual levels for the time of year. Meanwhile, thanks in part to Florence we saw a spike in nuclear outages the last few days. However, nuclear outages through 2018 have been far below those observed in 2017. We released a slew of content for subscribers today, from our Morning Update properly identifying the morning's cash-led rally to our Weekly Natural Gas Update covering all aspects of the natural gas market and providing our weekly price expectations and our Note of the Day, looking at the latest production and weather-adjusted demand estimates. We capped off the day with our Afternoon Update, looking at the latest afternoon weather model guidance, contract spread movement, and overnight price expectations. Try out a 10-day free trial here to give all this highly detailed weather and natural gas analysis a look.
Friday, September 14, 2018 at 4:55PM
The October natural gas contract settled just a cent lower today compared to last week, rallying Monday and Tuesday before reversing Wednesday and Thursday and selling off today. This helped our weekly sentiment from our Monday Natural Gas Weekly Update verify very well, as we saw short-term upside into resistance from $2.85-$2.88 as possible with any rallies failing but $2.75 support holding. Today we saw about equal weakness along the front of the curve too, though on the week the winter strip got hit much harder than the October contract. Meanwhile, an outage at the Brunswick nuclear power plant in North Carolina resulted in another tick higher in nuclear outages today. The main story with Florence continues to be the very heavy rain across the Southeast that is resulting in widespread flooding and decreasing cooling demand, however. This seemed to play a role in some of the weakness in physical natural gas prices today. It also helped V/X tick back down after a very significant run-up recently. In our Morning Update we highlighted that, "...headed into the weekend we do not see many catalysts and would expect a slow day today with $2.78-$2.82 the primary range and $2.75-$2.85 certainly holding. After yesterday’s EIA and with Florence risk is a touch lower, though sentiment overall neutral." That risk lower was realized with it being primarily focused at the front of the strip as the H/J March/April spread took another leg lower. We just published our Pre-Close Update, where we outlined to clients how we expected weather model guidance to shift over the weekend and how that could impact natural gas prices next week. We also looked at recent weather-adjusted demand trends today and the latest production estimates, as well what contract spreads appeared to be signaling about what catalysts are driving price action currently. To begin receiving all this detailed natural gas and weather-driven research, try out a 10-day free trial here..
Thursday, September 13, 2018 at 5:15PM
Despite a hurricane barreling towards the Southeast and a Thursday EIA print, it was a relatively slow day in the natural gas market, with a 5.1-cent range for the prompt month October contract. An in-line EIA print that confirmed recent loosening over the Labor Day holiday helped the October contract decline about half a percent on the day. Meanwhile, Chief Weather and Energy Analyst Jacob Meisel was on Bloomberg TV this morning breaking down the impacts of Hurricane Florence on energy markets. You can view the full segment here, but he generally broke down the potential for nuclear and natural gas plant outages in the Southeast as well as energy demand destruction from power outages and cooler weather. Those nuclear outages ticked back up today as plants began to close in the Southeast. Jacob also focused on the role that tighter weather-adjusted power burns this week played in helping natural gas prices rally before the demand destruction of Florence arrived. This has helped to contribute to strong cash prices and an October/November V/X spread that has only continued to run. The V/F October/January spread looks similar, sitting now far outside its historical range ahead of October expiry. Yet an in-line EIA print seemed to get the better of gas today, pulling it back from its high and helping another rally fail. The EIA announced that 69 bcf of natural gas was injected into storage last week, just 1 bcf above our estimate. This fit perfectly with our AM Update for clients, where we outlined that we, "...expect cash prices to again be firm today, especially following yesterday’s strength and what should be building heat into the weekend. This puts another AM bounce in play, with a strong chance that $2.85 gets tested again. However, production still near record highs and the first Hurricane Florence demand destruction should limit any rally, and could weaken cash prices by tomorrow...Combined with an EIA print of +68 bcf we are skeptical prices can break above $2.85-$2.88 resistance." That played out well with prices moving above the $2.85 level and reversing lower, confirming our Neutral sentiment on the day. We've been all over the natural gas market as of late, missing each of the last two EIA prints by just 1 bcf on either side with a very strong reading of balance. Our daily weather-adjusted balances have helped us keep clients ahead of forward price risk, especially when combined with our custom weather forecasts and contract spread analysis. Try out all this analysis for 10 days free of charge by signing up for a trial here and see how we can help you manage risk in the natural gas space.
Wednesday, September 12, 2018 at 4:38PM
The October natural gas contract tried to break out higher this morning only to reverse hard and settle flat on the day. Yet again the October led the way higher this morning as later contracts lagged, and we continue to see the October/November X/V contract spread skyrocket. In our Morning Update we highlighted a number of factors that seemed to continue, "...to keep at least $2.85 resistance in play short-term, and indications of any further tightening or of supply struggling to grow further could put $2.88 in play around tomorrow’s EIA data as well." Prices got up to $2.869 before reversing, justifying our neutral sentiment on the day too. Meanwhile, traders continue to await the load-killing impacts of Hurricane Florence in the Southeast. The 2 PM Eastern update from the National Hurricane Center shows the storm as likely to stall right off the North Carolina coastline before tracking southwest and eventually moving inland. Accordingly, a very expansive area is set to see tropical storm force winds, the likes of which could down trees and power lines, especially when accompanied by very heavy rain. The slow-moving nature of the storm means that 20+ inches of rain across parts of North Carolina are possible. This could create significant flooding and further exacerbate impacts across the region. The exact extent of demand destruction across the region is not yet clear. We expect some nuclear plants in the path of the storm to shut down, though that is not yet the case. We are also tracking the potential impacts not just on power demand but on a number of natural gas power plants across the Southeast as well which could see the full force of the storm nearby. Tomorrow at 8:10 AM Eastern Chief Weather and Energy Analyst Jacob Meisel will be on Bloomberg TV breaking down the expected energy market impacts of Hurricane Florence, so be sure to tune in. Meanwhile, in our Afternoon Update we also broke down potential storm impacts as well as recent balance dynamics and EIA expectations for tomorrow's storage number, keeping clients ahead of each major move in the natural gas market. Try out a 10-day free trial here to give all this research a look.
Tuesday, September 11, 2018 at 4:59PM
The October natural gas contract bounced again today, though as we have outlined for clients the last couple of days this bounce appears to be independent of the impending Hurricane Florence landfall in the Southeast. Meanwhile, confidence in Hurricane Florence making a landfall somewhere in the Southeast as a major hurricane only continues to increase, as seen in the latest forecast from the National Hurricane Center. The most recent model guidance has moved very slightly south of earlier National Hurricane Center forecasts, with landfall across southern North Carolina or northern South Carolina most likely but a larger array of scenarios still remaining on the table. We continue to track the supply and demand impacts from Florence in the natural gas market, alerting clients what way it could skew price risk. One piece of information we have noticed is that recent rainfall forecasts show most of the heavy rain likely remaining out of the Marcellus/Utica reason, which should limit production disruptions at least through the next 7 days. However, these forecasts are liable to change and we continue to track them closely. In our Morning Update, we concluded that all things equal we saw "risk slightly higher towards $2.85 first over another test of $2.75 short-term" due to a number of factors including slight overnight GWDD additions. This verified well as the October contract peaked at $2.836 and the V/X spread flipped positive. We see this move coming despite Florence rather than instead of it, as demand destruction from Florence is more likely to hurt physical prices across the East. Still, the extent of market impacts from Hurricane Florence remains quite uncertain, as models differ in key ways on the exact track, speed, and intensity of the storm. We will continue to track the storm closely, as the exact track and intensity inland will determine the resulting power demand impact. Of course, we wish our best to all those that are in the path of this very dangerous storm, and advise to take all warnings very, very seriously due to the potential this storm has (satellite image from the Penn State Electronic Wall Map site). To read our latest analysis on expected impacts from Florence on the natural gas market, as well as all our other natural gas-driven analysis, try out a 10-day free trial here..
Monday, September 10, 2018 at 4:29PM
The October natural gas contract rallied around a percent on the day as support at the $2.75 level was able to hold firm and physical prices in the South were strong. The role of strong physical prices can be seen along the strip, with the October contract logging the largest daily increase. This came with relatively few weekend GWDD adjustments, as outlined in our Morning Update. Our Pre-Close Update from back on Friday highlighted this well, as we looked for $2.75 support to hold early this week and saw a bit of upside early this week. However, any upside seemed limited thanks to risks posed by Hurricane Florence approaching the Southeast. The latest forecasts show Hurricane Florence likely to make landfall as a major hurricane in the Carolinas sometime late on Thursday, as we had warned clients about late last week. As seen on Tropical Tidbits, recent model guidance appears to favor the northern edge of that track, with a North Carolina landfall looking increasingly likely. Those that are in the potential path of this storm need to take it extremely seriously, as a Category 4 hurricane landfall appears quite likely. Evacuations are under way, and communities closest to landfall can expect very, very significant impacts. Recent model intensify forecasts from Tropical Tidbits show a strong consensus that the storm will not weaken significantly until it moves over land. Meanwhile, that's not all we have to watch. Our Note of the Day for subscribers today outlined potential impacts from other tropical systems forming in the Atlantic over the coming week or two. Currently, there are three hurricanes across the Atlantic basin and two more areas of interest that could develop in the next 5 days as well. For now, though, all attention is on Florence, as certainly it will bring impacts to the natural gas market as we have covered closely for clients today. First and foremost, though, the human aspect of the storm is one that ought to be respected and taken very seriously due to its expected intensity. In the coming days we will be sure to have more on this major hurricane, and of course will continue tracking impacts on the natural gas market and shifting weather forecasts and supply/demand balances, as we saw a change in weather-adjusted demand be responsible for much of the natural gas move today. To give all our research an in-depth look, try out a 10-day free trial here.
Friday, September 07, 2018 at 4:33PM
It was a rough week for natural gas bulls, with the October natural gas contract declining just less than 5% on the week. It was another week where natural gas prices traded very well within our weekly expectations set out in our flagship Natural Gas Weekly Update. Short-term forecasts trended cooler thanks to Tropical Storm Gordon as expected, EIA data came within 1 bcf of our expectation, and a weak winter strip continued to limit any rallies even as we saw a floor from $2.75-$2.8 defended. Meanwhile, we have continued to see winter weakness with a new narrow V/F settle on the day. Also, today we saw the smallest prompt month trading range of the year for natural gas prices, something we have been saying a lot the past few months. The October contract traded in just a 2.6-cent range after seeing much larger moves earlier in the week. In our Afternoon Update we highlighted that we expect a slow trading day today within a narrow trading range and that neither our support or resistance should break. Then this morning we showed relatively few overnight weather changes that would move prices today. Climate Prediction Center forecasts showed that, indicating slight cooling trends in the 6-10 Day period with decreased confidence in heat but nothing that was all that significant. Meanwhile, traders continue to monitor Tropical Storm Florence, as it progresses towards the eastern US. Any landfall is still several days away, and in our Pre-Close Update we broke down any potential impacts from the storm on natural gas prices. This Pre-Close Update also ran through our expectations for how weather forecasts (including Florence's track) would adjust through the weekend and where we see natural gas price risk skewed moving into next week. We combine that with our spread and balance analysis to provide a holistic view of the natural gas market, identifying opportunities and risk each and every day. Try out a 10-day free trial here to put all this in-depth research to use.
Thursday, September 06, 2018 at 4:39PM
The Energy Information Administration announced that 63 bcf of natural gas was injected into storage this past week, coming in just 1 bcf below our 64 bcf estimate and slightly above the market consensus around 61 bcf. The result is that the prompt month October natural gas contract continued its grind lower today, with EIA data not providing much of a catalyst to bounce and confirming much of the recent balance loosening that the market has priced in. In our Morning Update we highlighted that, "...at +64 bcf we are a touch higher than the market consensus today as we see significant wind generation last week loosening power burns as Canadian imports and production both increased as well. Any print at or above our estimate would put $2.75 in play, though the test of that support likely holds as we are finally seeing power burns tighten up a bit at these lower price levels. Still, EIA data this week and next is loose enough that when combined with cool forecasts into early next week we should at least see another support test." With the print a bcf below our injection estimate prices never did touch $2.75, but they came close, and our slightly bearish sentiment for the day verified well. This came with relatively minimal overnight GWDD changes as well. Immediately after the print, as usual, we released our EIA Rapid Release for clients, putting the print in historical context by looking at how tight/loose it is to last year and the 5-year average while also updating our weather-adjusted storage modeling and examining the expected price impact. This morning we outlined that the print was neutral and unlikely to have a major impact on prices today, while also being loose to most baselines. We now head into the last trading day of the week having provided clients with the latest daily look at weather-adjusted demand and power burns in our Note of the Day as well as looking at weekly storage balances and seasonal storage expectations in our EIA Rapid Release and forward price and weather expectations in our Afternoon Update. To get a full breakdown of all this research and see how we can help you manage risk in the natural gas space, try out a 10-day free trial here.
Wednesday, September 05, 2018 at 4:48PM
Natural gas prices continued moving lower today, with the October contract falling another percent on the day. The trend of winter contract weakness continued again today too. Unlikely yesterday, however, the majority of the selling today took place in the afternoon. Initially this morning we saw the October contract bounce up to $2.843. This fit in well with our Morning Update, where we emphasized we were slightly bearish on the day but expected a morning rally to eventually fail. Sure enough, that morning rally failed, and prices continued lower and settled right near the lows of the day. Some of this appeared to be the natural gas market pricing in a storage injection to be announced by the EIA tomorrow that should be looser than the one observed this past week. We saw more weather-driven demand last week than the week prior. However, we are looking for a storage injection to be announced that is just a bit smaller than the one last week. This is in part due to looser power burns as well as an increase in Canadian imports from the prior week. Traders are accordingly looking for an injection that comes in rather close to the 5-year average of 65 bcf as well as the year-ago level of 60 bcf. In our Afternoon Update for clients today we broke down our expectations for price action into the print as well as what we expect the print to reveal and what role it already has had in influencing natural gas price action today. This comes after our Afternoon Update from yesterday proved right on for today. To begin receiving all this detailed research, including our latest weather-adjusted demand and burn modeling, storage forecasts and modeling, and custom weather forecasts, try out a 10-day free trial here.
Tuesday, September 04, 2018 at 4:21PM
It was a post-Labor Day bloodbath for natural gas prices, as the October natural gas contract plummeted over 3%. Winter natural gas contracts did not fare much better today, with the November contract actually logging the largest loss on the day. This move was far from a surprise for subscribers; in our Friday Pre-Close Update we highlighted that our natural gas sentiment had turned slightly bearish as we saw at least $2.85 likely to be tested due to holiday demand destruction loosening weather-adjusted power burns and seasonality turning very bearish. Those trends played out today and led to price action whereby the prompt month natural gas contract is off 16 cents from recent highs but V/F is still near recent narrow levels. These bearish trends for natural gas were furthered by significant cooling demand losses in the coming week due to Tropical Storm Gordon coming onshore along the Gulf Coast and only slowly moving across the center of the country. This played a large role in the GWDD losses we outlined in our Morning Update for clients as likely to keep natural gas risk skewed lower through the day today. Traders are now trying to determine where a floor is for prices, and in our Note of the Day today we looked at the latest weather-adjusted balances to see where support could begin to be found and how we compared to the rest of the summer. Then in our Afternoon Update we looked at the latest weather forecasts and trends along the natural gas strip to determine how price risk was skewed into Thursday's EIA print. To give all this research a look and see how we can help you navigate risk in the natural gas market try out a 10-day free trial here.
Friday, August 31, 2018 at 4:28PM
The October natural gas contract settled up around a percent and a half on the day as overnight forecasts added a significant amount of cooling demand, showing heat may sustain into the middle of September. Most natural gas contracts were still down weakly on the week, though this heat and strong cash prices helped the October contract log a tiny weekly gain. In our Afternoon Update yesterday we warned that, "...medium-term heat and strong cash prices appear enough for a bit of short-term upside towards $2.9 or even $2.92 tomorrow..." and followed up this morning by outlining that heat could increase that ceiling a bit more ahead of the weekend. Sure enough, the October contract briefly broke above our $2.92 level to test $2.931 before settling right back around $2.92. Afternoon Climate Prediction Center forecasts show the sizable day-over-day heat addition that was responsible for much of this. Overall, most of the developments we forecast in our Weekly Natural Gas Report back on Monday played out well. We saw prices as likely to fall back on loosening balances and cooler long-range forecasts early in the week, then warned of a spike into the Wednesday contract expiry like occurred. We even correctly identified the bearish risks around the EIA print, as it missed just 4 bcf higher to our expectation and even higher to the market consensus, though it was the hotter forecast trends that allowed prices to recover into the end of the week and kept weekly losses from being larger. Of course as we move through September we begin to look more closely at heating demand over cooling demand as well, and our seasonal forecasts begin to get that much more important as we look further out into winter and determine potential temperature biases. Already our Seasonal Trader Report looks out through December, and next week we release our preliminary January forecast as well after properly identifying the temperature biases in each of the key winter months in advance this last winter. To give this Seasonal Trader Report a look, and also begin receiving our Weekly Natural Gas Report and numerous daily reports that look at weather model changes, our custom forecasts, and changes in weather-adjusted balances in the natural gas market, try out a 10-day free trial here.
Thursday, August 30, 2018 at 4:41PM
The October natural gas contract took over as prompt today, moving up a bit more than a cent on hotter forecasts even as EIA data missed slightly to the bearish side. Prices initially shot lower when the EIA announced that 70 bcf of gas was injected into storage last week, compared to our estimate of 66 bcf and a market consensus that was closer to 63-65 bcf. In our Note of the Day for clients this past Friday we noted that loosening power burns were likely to result in a larger storage injection to be announced today. In our Weekly Update on Monday we again noted that there were upside risks around this print, but noted that a large storage deficit would still prove supportive this week. Then this morning we highlighted that, while we saw room for a morning rally, "[w]e additionally see some bearish risks with this morning’s EIA print and are looking for a number around 66 bcf that would seem to limit upside as well." Though the print was a touch larger than expected, clients were prepared for the upside risk which had been our focus all week. Still, that was quickly shaken off thanks to GWDD additions we had also noted this morning. In fact, last week's EIA print missed 4 bcf tight to our estimate, whereas this week missed 4 bcf loose, an indication that on a 2-week basis we have a strong reading of a market that continues to see weekly EIA noise. This has helped us accurately predict forward price risk through the last couple of weeks and especially over the last week, where have seen a weak strip pull back contracts at the front. Attention now turns to how currently hot forecasts are likely to change over the weekend, and undoubtedly traders will continue to digest this most recent EIA print tomorrow. We'll again be releasing our daily weather-adjusted power burn and demand figures for subscribers tomorrow, alerting them how we see risk skewed into next week's EIA print as we look at both daily and weekly weather-adjusted balances. Overlaid with our custom weather forecasts and spread analysis we can provide an unparalleled holistic view of the natural gas market you can see for yourself by signing up for a 10-day free trial here.
Wednesday, August 29, 2018 at 4:37PM
It was an exciting expiry for the September natural gas contract, as after rallying in the morning and pulling back into the early afternoon the contract spiked in the final hour before expiry to expire up around a percent and a half on the day. The role that the September contract had in dragging up the rest of the strip was clearly seen by the end of the day. In our intraday Note out at 10:30 AM Eastern we highlighted this curve structure, indicating that there was short-term downside but also that with such a curve structure we could be looking at a bounce around expiry. Additionally, in our Morning Update highlighted that, "...morning spreads would indicate that any September bounce towards $2.88 or $2.9 for expiry would only be a temporary bullish catalyst for the strip." We did get that catalyst, though, with the September contract expiry at $2.895 and U/V ballooning. Hotter afternoon model guidance helped increase concerns about storage levels and seemed to be one catalyst for the spike in the final hour of the day. These hotter trends come after previous guidance had cooled the long-range, as seen on the CPC 8-14 Day temperature probability forecast. Moving forward, traders are equally focused on tomorrow's EIA print, which is likely to show the largest build in storage since late June. Most analyst estimates sit above the 5-year average build of 59 bcf as well, which would also market the first time since late June we built more than the 5-year average in a week. Of note last week were LNG exports which dropped off but have thus far recovered this week, something we track daily for subscribers. Following quite a bit of volatility today, we would expect tomorrow to be fairly active as well with shifting weather forecasts, a larger EIA build, and a changing supply picture. We continue to break down all these dynamics for clients, looking at weather-adjusted demand, supply, contract spreads, and of course changes in the weather forecast to determine how forward natural gas price risk is skewed. To give all our detailed research a look, try out a 10-day free trial here.
Tuesday, August 28, 2018 at 4:51PM
The entire natural gas strip was led lower today, with the September contract settling down a bit less than a percent. Today was its options expiry, with traders pinning the contract right around the $2.85 level into the expiry. Lingering cash strength again helped keep the September contract from seeing the worst losses as the winter strip led us lower. This was the same trend yesterday too, as in our Morning Update we highlighted significant weakness all along the strip yesterday. The result has been a narrowing of V/F even as the September contract has sold off from $2.98 down to $2.85. This has come as some of the long-range heat risks have eased slightly, though heat across the East remains likely in Week 2 per the Climate Prediction Center. Price action today fit our expectations almost perfectly, with September prices testing the $2.85 level but not being able to move much below it. Our Afternoon Update yesterday also highlighted that the $2.85 should be tested today. We've been all over this recent decline, and today in our Note of the Day and Afternoon Update alerted subscribers as to where we see risk skewed moving forward now that our $2.85 objective from the last couple of weeks had been reached. We also looked at how forecasts were likely to change moving forward and gave a deeper breakdown of EIA expectations for Thursday, while covering latest El Nino expectations in our subscriber-only live chat this afternoon. To get access to all this research, from weekly seasonal forecasts and live chats to daily weather model and natural gas technical analysis, try out a 10-day free trial here.
Monday, August 27, 2018 at 5:50PM
The September natural gas contract fell almost a percent and a half again today as balances continued to loosen over the weekend and forecasts cooled slightly. The entire strip got hit today, with lingering cash strength on short-term heat actually propping up the September contract slightly. The result was a tick higher in the U/V September/October contract spread as we approach contract expiry. Meanwhile, our Morning Update highlighted slight GWDD losses over the weekend, even though we still expect cooling demand to run solidly above average over the next couple of weeks. Today's Update also further validated our Natural Gas Weekly Update from last Monday that highlighted that a short-term bounce into $2.98-$3 would fail and that into early this week downside should open up for prices as long-range forecasts fail to maintain heat and balances continue to loosen. Meanwhile, traders are beginning to focus on the EIA data expected out on Thursday. Some of the first data for it was released today, with Dominion Transmission announcing an injection of 8 bcf last week following an injection of 9 bcf the week prior. In our Afternoon Update for subscribers we analyzed the latest model trends, forecasting how models should continue trending overnight after we accurately predicted that they would cool in the long-range this afternoon. We also looked at the latest natural gas balances and spread action on the day, providing a holistic view of the natural gas market and looking at where prices were most likely to trend from here. To give this report (along with our new Natural Gas Weekly Report) a look, and begin receiving all our detailed natural gas and weather-driven analysis, try out a 10-day free trial here.