BWS Blog


Hotter Weather Changes Help Extend Natural Gas Rally

Tuesday, June 11, 2019 at 5:28PM


While natural gas prices remain at very low levels historically, we have now put together nearly a 10 cent rally off the multi-year lows set late last week. The July contract closed the day up just over 4 cents, closing a tick under the $2.40 level.

natural gas commodity weather

Changes in supply / demand balance data along with firmer cash prices certainly helped the market set at least a temporary bottom, but weather changes have grown increasingly bullish as well compared to what we saw at the conclusion of last week. This was a risk we alerted clients to back in our Friday afternoon "Pre-Close Update".

natural gas commodity weather

It took a couple of days, but those warmer risks have become much more apparent. Take, for example the 7-11 day surface temperature anomaly forecast from the GEFS back on Sunday:

natural gas commodity weather

The current forecast, valid the same period, has shifted decidedly warmer:

natural gas commodity weather

The changes continued beyond this period as well, as can be seen by comparing Sunday's 11-15 day GEFS forecast to the latest run, valid the same dates. Here is Sunday's run:

natural gas commodity weather

Now, the latest run:

natural gas commodity weather

The warmer shift in both periods has boosted weather demand forecasts, contributing to this week's natural gas rally. Have the weather models completed their warmer adjustments, or is this a trend that continue to grow? Our products can help keep you one step ahead of these potential market-moving changes. Sign up for a 10-day free trial here to take a closer look at what we have to offer.