Tuesday, December 04, 2018 at 4:59PM
After significant selling yesterday the entire natural gas futures curve got a bid today, with significant gains at the front of the strip. By the end of the day the January natural gas contract settled up just less than 3%, solidly in the middle of its recent range. It was clear early in the day that storage concerns were front and center as the March contract got going first, dragging the rest of the strip higher. We highlighted this in our Morning Update, where we outlined that "...a bit more March contract strength indicates that storage concerns are back elevated...thus we cannot rule out bounces towards $4.5 short-term..." even though overnight models did not significantly increase cold risks in the next two weeks. Afternoon Climate Prediction Center forecasts highlighted this too, as warm risks seemed to tick down slightly but day-over-day forecast changes were minimal. Yet a key climate model trended far colder early in January last evening which seemed to first get prices moving higher, and they never looked back. In our Seasonal Trader Report for subscribers today we outlined our winter weather expectations through March, explaining when cold could return after mid-December warmth and demonstrating our forward natural gas storage expectations. Of note was strength seen along the 2019 natural gas curve as of yesterday's settle which continued today. We also held our subscriber-only live chat on Enelyst, where we fielded subscriber questions and looked at the most recent balance, weather, and natural gas price dynamics. Of note today was a dip in production but bounce in Canadian imports, though overall supply was down day-over-day. We also looked at the latest Madden/Julian Oscillation forecasts from American GEFS weather model guidance, explaining what this showed about the timing of any mid-December warmth and any eventual return colder. Certainly weather will be a central focus moving forward, as traders are looking for hints of when cold could return in the long-range as well as how intense any warmer weather in the longer-range is likely to be. In our Afternoon Update we ran through the latest weather model guidance and price expectations, putting today's March-led rally in context as well. To read this Update, and get access to all our other detailed weather and natural gas-driven content, try out a 10-day free trial here.