Monday, September 30, 2019 at 4:08PM
Natural gas prices made another leg lower in today's session, with the November contract (now prompt month) having fallen now more than 40 cents off its intra-day peak a couple of weeks ago, closing at $2.33 today, more than 7 cents off Friday's close. Prices tried to hold their own early this morning, down only a couple of cents, but with our analysis showing a weak overall picture, we were able to alert clients to the risk of more downside, taking on a "slightly bearish" stance in our morning update. Prices wound up declining another five cents over the balance of the day. Why the continued weakness? A few things stand out. One is that the big rally was never about supply / demand balances having tightened up, so the only thing the move to 2.70 really accomplished in the big picture was to actually loosen balances, with the evidence coming in the last couple of EIA reports. Two, we saw a move higher in production over the weekend, reaching a new all-time high, just under a staggering 94 bcf / day per our dataset. Finally, we are seeing a shift in the weather pattern toward below normal demand, as, despite some variability, the overall warmer than normal base state continues to hold in key areas of the nation for natural gas purposes, which is now becoming a bearish signal, as warmth will now mean more of a reduction in HDDs than any gain in CDDs as normal temperatures continue to decline. Total forecast Gas-Weighted Degree Days (GWDDs): Are we near a point where, as the saying goes, low prices will begin to cure low prices? Of course, as we move forward, Mother Nature will increasingly have more of a say in all of this, so we will be watching the pattern signals very closely, in tandem with the natural gas fundamentals scene. Sign up for a 10-day free trial of our services here to check out what our latest research is indicating regarding the future of the natural gas market as we move closer to the winter demand season.