BWS Blog
Natural Gas Prices Find Support In Wake Of EIA Report
Thursday, May 23, 2019 at 2:59PM
After two big down days in a row, natural gas prices were able to find some support today, with the June contract settling up around 4 cents on the day.
In our afternoon report yesterday, we highlighted the fact that the selling seemed overdone, and moved our sentiment to "slightly bullish", feeling that a rebound could occur in today's session.
This worked out quite well, with the June contract coming within a penny of touching the 2.60 level once again. Part of our reasoning was also our expectation for the injection in today's EIA report to be on the low end of the range of most market estimates (generally ranging from 100-108 bcf). Our call was for a 100 bcf build, which wound up dead-on with the report.
This number was similar to last week's 106 bcf build in terms of implied supply/demand balances.
In terms of what is next, we have some strong heat to wade through over the next week, and the market will want to see how the supply/demand balances look during this hotter spell, which is going to deliver numerous record highs in the Southeast over the next several days. Many areas will top out near or above the 100 degree mark on the hottest days. Here are Tuesday's forecast highs, for example:
We do still see the level of heat backing down somewhat after next week, with total GWDDs falling back closer to normal levels into early June.
Will the near-term heat be enough to propel natural gas prices higher from here, or was today simply a "one-and-done" before sellers take over once again? Sign up for a 10-day free trial here and see what our latest research suggests!
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Natural Gas Prices Reverse Yesterday's Gains And More
Tuesday, May 21, 2019 at 5:00PM
After a solid "up" day for natural gas prices yesterday, today saw a reversal, with the market giving up those gains and then some in today's session. June prices fell 6 cents on the day.
The decline was mostly due to production returning higher, confirming that the drop this past weekend was very short-lived.
Because the rise in production was the main driver in today's price move, the impact was felt throughout the entire natural gas curve today.
There were a couple of other bearish forces at work today, however, as LNG exports were notably lower today.
We also had a lower revision in forecast weather demand this morning, albeit fairly small.
We do still have some impressive heat to wade through in the near term, with numerous record highs possible in the Southeast over the next several days. Highs this Friday can reach the upper 90s in that portion of the country.
We can even see some 100+ highs early next week.
Will the coming heat alter the overall picture in the natural gas world? Sign up for a 10-day free trial here find out what our answer is, based on our latest research!
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Natural Gas Shakes Off Weak Cash, Then Rallies After In-Line EIA Report
Thursday, May 16, 2019 at 4:53PM
After a notable drop yesterday, natural gas prices recovered today, with the June contract posting a gain of nearly 4 cents on the day.
A rally was far from a sure thing early on, however, as prices initially dropped early this morning, and that was followed by relatively weak cash prices again today.
Next up was the EIA report, which our BWS forecast nailed this week with our estimate for a build of 106 bcf.
While much larger than last week's build, it did confirm a tighter supply / demand balance than the last several weeks.
This combined with some in the market having called for a build of around 110 bcf likely helped prices move back up. While it was tighter, it was still loose when looking at the same week in previous years.
As can plainly be seen, additional tightening of balances is needed to convert the overall picture to a "bullish" one.
The weather pattern is certainly doing its part to try and help out, with an abundance of late-May heat on the way in the eastern half of the nation.
Current 6-10 day GEFS forecast:
Current 11-15 day GEFS forecast:
Record heat may be seen late next week in the Southeast, with some locations flirting with 100 degrees for a high, quite extraordinary for late May.
Many questions remain, however. Will the supply / demand balances continue to tighten when faced with these hotter temperatures? And will this heat continue right on into early June? Sign up for a 10-day free trial here and take a look at our latest research which tackles these important questions, and how we feel traders can best profit from these changing conditions.
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Hotter Weather Trends Help Give Natural Gas Prices A Boost
Tuesday, May 14, 2019 at 4:58PM
Natural gas prices advanced higher today, closing at their highest levels since the middle of April, with the June contract up nearly 1.5% on the day.
While the front of the curve led the charge, we saw some solid strength throughout the forward curve.
What factors led buyers into the market? One reason is that we saw a rather large dip in today's production data.
There can be some revisions to this data, but will likely remain as a decent day over day decline, even if only temporary.
The other bullish catalyst today? It was the weather. We continue to gradually add demand to the forecast over the next couple of weeks.
This comes as models converge on a persistent upper level trough over the western U.S, pumping up a strong downstream warm ridge over the eastern half of the nation, seen in today's 6-10 day GEFS modeling:
This results in much warmer than normal temperatures over the majority of demand centers from the middle of the U.S. to the East Coast.
The pattern type largely remains the same in the 11-15 day projections:
This will no doubt conjure up memories of a year ago, when the pattern turned hotter and stayed that way all summer long, leading to one of the hottest summers on record for the nation as a whole, contributing to the very low end-of-season natural gas storage levels at the end of Summer 2018. Is history going to repeat itself this year? Sign up for a 10-day free trial here to find out what our latest research suggests regarding the upcoming season!
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Natural Gas Prices Bounce Around, Only To End The Day Close To Flat
Monday, May 13, 2019 at 4:18PM
Natural gas prices closed today's session with only a small 2 tick gain in the June contract after a lot of back-and-forth.
Prices first dropped early in the morning, followed by a sharp rally based on stronger cash prints. That rally was unable to hold, however, due to selling pressure in later-dated contracts, which mostly closed down on the day.
Our morning report correctly highlighted the possibility of choppy price action, taking a neutral stance, which proved to be the correct lean once the smoke had cleared.
Some warmer weekend weather forecast changes did show up, taking forecast demand a little above normal thanks to some early heat in the eastern half of the U.S. over the next couple of weeks.
GEFS 6-10 day forecast temperature anomalies:
This equates to widespread highs in the mid 80s to even low 90s in the southeast quadrant of the nation on the hotter days.
It marks the first real taste of summer in terms of widespread above normal heat, as we move closer again to a time of year when weather becomes crucial to the natural gas market. Is this early heat an indication that the U.S. will face another hot summer this year as we saw in 2018? Sign up for a 10-day free trial here and take a look at what our latest research suggests for the upcoming season and its impact on natural gas prices!
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Natural Gas Prices Unable To Hold Yesterday's Gains Despite In-Line EIA Report
Thursday, May 09, 2019 at 5:09PM
After a strong rally yesterday, naturals gas prices fell in today's trading session, with the June contract off as much as nearly 5 cents before moving off its lows and closing down 1.5 cents on the day.
Today's EIA release showed that we injected 85 bcf last week, dead on with what market expectations were, although that did confirm a slight loosening of the supply / demand balance compared to last week's report.
When looking at the same week in prior years, the loose balances are even more evident.
On the weather front, our forecast today did call for slightly more demand over the next couple of weeks compared to yesterday's forecast.
The demand picture is a tricky mix at this time of year, however, with the gains next week coming in the form of higher HDDs in the Northeast, where cool anomalies are seen.
Out in week two, the demand gains come via additional CDDs, with warmth spreading into the eastern U.S, enhancing cooling demand in the Southeast.
Will all of this be enough to inject more life into the world of natural gas, where prompt month prices in recent weeks have been hovering near their lowest levels in the last three years? Sign up for a 10-day free trial here and see what our latest research suggests!
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Natural Gas Prices Continue Their Downward Slide
Monday, May 06, 2019 at 3:35PM
It is a new week, but no new trend for natural gas prices, as the June contract settled another 4 cents lower on the day today, marking its lowest value since June became the prompt month.
The main culprit was once again a lot of weakness in the cash market, with spot prices disappointing the market and inciting another round of selling throughout the curve, most pronounced at the front of the curve, as to be expected when cash is very weak.
While supply / demand balances have shown some improvement over the last week or so, one issue the market is facing is quite simply, a lack of demand. Our morning forecast shows that, after a handful of days later this week, demand returns to lackluster levels heading into the middle of the month, with cooler changes lowering the risk of early-season heat.
These cooler changes are tied into progression of a high amplitude wave in the Madden-Julian Oscillation (MJO), which we alerted subscribers to last week regarding its potential cooler influence.
Over the weekend, models remained quite steadfast in moving the MJO over toward phases 8 and then 1.
And sure enough, the pattern looks solidly cooler around the middle of the month, as seen in the latest GEFS 6-10 day forecast.
All of this leaves the natural gas market in search of a catalyst before it can finally attempt to advance higher. Is there hope for change on the near-term horizon? Sign up for a 10-day free trial here to find out what our research suggests as we draw closer to the summer season.
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Bearish EIA Report Smacks Natural Gas Prices
Thursday, May 02, 2019 at 5:17PM
Natural gas prices returned into the red today, with the June contract closing just over three cents lower on the day.
The main culprit was a bearish EIA report, showing a large build of 123 bcf for the week ending 4/26. Despite the large number, it was actually indicative of a slightly tighter supply/demand balance when compared to the prior two weeks.
It certainly was not "tight" by any means, as it remained much looser than the same gas week in prior years.
Prices did rebound off their lows, however, after being down as much as 5.5 soon after the release of the number. Power burns have been more impressive this week thanks to some heat in the southern states, and we have another burst of early heat in the Southeast on the horizon for next week, as seen in the current 6-10 day forecast from the GEFS.
This shows up in our forecast demand chart quite easily, with another bump up in GWDDs mid to late next week.
This raises the possibility that we will continue to see some strength in the burns into next week as well, likely one factor that helped us to rebound somewhat today, as the market was forced to weigh this information against the bearish EIA report.
What's the next move from here? Sign up for a 10-day free trial here and check out what our latest research is indicating.
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Tighter Balances And Stronger Cash Lift Natural Gas Prices
Wednesday, May 01, 2019 at 5:01PM
For the fourth time in the last five sessions, natural gas prices have posted gains, with the June contract closing 4.5 cents higher today.
It was not immediately clear that we would see such a day, however, as prices initially moved down early in the morning, but the fundamentals data looked quite impressive this morning. Production, which often shows a ramp up in the data at the end of a month, stayed well off its highs, for one.
We also saw LNG exports tick back up, inching closer to their record high levels.
This data, plus some impressive burns thanks to the current heat in the southern U.S. led us to go with a slightly bullish outlook in our early morning update.
Sure enough, we began to rally quickly as the market digested the new supply / demand data, with the rally continuing as cash prices came in stronger than yesterday, continuing their gradual upward climb.
As we look to the weather side, we see the current elevated demand levels, especially relative to this time last year, though overall demand heads a little lower once into next week.
There remains some elevated warmth in the Southeast next week, however, as seen in the current 6-10 day outlook.
Will all of this be enough to allow natural gas prices to continue their climb in upcoming trading sessions? Sign up for a 10-day free trial here to take a closer look at what our research suggests as we move forward.
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Natural Gas Prices Finally Halt Their Slide
Thursday, April 25, 2019 at 5:03PM
After quite the decline in recent weeks, natural gas prices were finally able to put together a noteworthy upward move today, with May prices rallying over 2% on the day.
The move came after being down initially in morning trading. In our morning report, we had warned of some upside risk in prices, with our sentiment being "slightly bullish" for the day.
That worked out well, with the entire curve finishing the day with gains.
Helping to spark today's rally appeared to be alleviating fears that today's EIA Report would show an injection around 100 bcf for the week ending 4/19/19. The number wound up coming in right at our estimate of 92 bcf.
While still a much larger build compared to the 5-year average, it did not represent quite as weak of a supply / demand balance as the prior two weeks.
We also have continued to see gains in forecast weather demand over the next couple of weeks, with our forecast running a little higher than normal demand levels, and much higher than demand levels on the same dates one year ago.
At this time of year, weather isn't typically as much of a player in the natural gas world, but this setup is rather unique, with enough cold weather in the north for heating demand to be enhanced, but also some heat in the southern U.S. to enhance cooling demand, as shown in the GFS Ensemble projection for the 6-10 day period.
Forecast high temperatures even this weekend are rather chilly for this time of the year from the Upper Midwest to New England.
By the middle of next week, focus shifts quickly to the South, where we will see numerous high temperatures in the 85-90 degree range, definitely enough for folks to crank up the air-conditioning.
What does all of this mean for natural gas prices over the next several days? Sign up for a 10-day free trial here to see what our latest research suggests.
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Natural Gas Prices Remain Stuck In Shoulder Season Rut For Another Day
Wednesday, April 24, 2019 at 5:12PM
After an early rally that saw May natural gas prices up as much as 3 cents on the day, much of the rally reversed, with the May contract finishing up only 7 ticks on the day.
Yesterday, cash prices were the culprit in triggering widespread selling, though today's cash prints were a little firmer.
So, if not cash, then what halted today's attempt at a rally? It was continued pressure on later-dated contracts, from summer through next winter, which then bled into the front of the curve.
The relentless selling in the later-dated contracts has not allowed us to have a true "Spring rally", which has historically been common, making this year a big outlier in recent seasonality trends.
On the weather side, we have seen some colder adjustments in the northern half of the nation, along with some warmer changes in the southern U.S.
This pattern leads to more heating demand in the north, and some early season cooling demand in the south, boosting GWDD levels back closer to normal for this time of year.
For the first time in several weeks, we also now finally see forecast GWDDs (weather demand) higher than the same dates from last year.
Is all of this enough to finally spark a rally in natural gas prices, or are the robust supply levels too much to overcome? Sign up for a 10-day free trial here and take a look at what our research shows regarding the search for what comes next in the natural gas world.
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