BWS Blog


Warmer First Third Of February Eliminates Winter Gas Premium

Monday, January 28, 2019 at 4:58PM


It was another bloody day for natural gas bulls, with the February gas contract gapping down significantly and an early intraday bounce failing as well. The contract ended up settling down over 8% into options expiry.

natural gas commodity weather

The role of weather in the move was incredibly clear with the February contract logging by far the largest loss of the day.

natural gas commodity weather

This helped easily pull the March/April H/J spread to new lows.

natural gas commodity weather

Our Morning Update showed just how pronounced the GWDD losses were over the weekend, with most of them confined in the medium-range.

natural gas commodity weather

The Climate Prediction Center has been showing this more consistently too, with their Afternoon Update remaining quite warm through the 6-10 Day period.

natural gas commodity weather

In our Natural Gas Weekly Update for clients today we took a deeper look at the impact these warm trends have had on natural gas storage projections, and outlined our thoughts on this Thursday's EIA number as well. We highlighted that it will easily hold the largest draw of the season so far with significant GWDDs last week.

natural gas commodity weather

Yet on a weather-adjusted basis the print looks to be looser than last week, due in thanks to demand destruction from the Martin Luther King Jr. holiday last Monday.

natural gas commodity weather

In our Afternoon Update we ran through our latest balance, natural gas price, and weather expectations, breaking down the trends on 12z weather model guidance and explaining what we see as most likely tomorrow into the February contract expiry. That came after our Note of the Day took a closer look at weather-adjusted power burns and imports/exports, providing subscribers with a holistic view of the natural gas market. Try out a 10-day free trial here to give it all a look.