Monday, June 03, 2019 at 7:29PM
How low can you go? That's the question that is on the minds of many in the natural gas world, as we had our third consecutive session with a noteworthy decline, sending the July contract another 5 cents lower today, barely closing above the $2.40 level. These levels are quite uncommon for this time of the year, especially considering we are still (for now) at storage levels that are under the 5-year average. Mother Nature is not helping out lately, however. Last week we looked at El Niño and pointed out how this phenomenon was something to watch as we move forward, and how it had gained some strength last week. This week's data shows some further strengthening as well, as seen in the latest sea surface temperature anomalies posted by NOAA. No, this doesn't mean El Niño is now a lock to rule the weather pattern, but the recent strengthening is having an impact. Here is the typical summer correlation with El Niño and summer temperature departures: As you can see, it's a fairly widespread cooler signal. Now let's check the latest GEFS for the 6-10 day period: And the 11-15 day time frame: That's a lot more "blue" than what we saw previously, as the atmosphere is responding to the push farther into El Niño territory. It results in demand levels that now have fallen a little below the long term 30-year normal, and well under levels seen last year. Of course, weather is not the only reason prices are where they are, but it isn't exactly being friendly to bulls either. Time will tell if that changes. Our products can help keep you up to date on this as well as other information that is critical to the world of natural gas. Sign up for a 10-day free trial here to take a closer look at what we have to offer to help you stay ahead of the market.