BWS Blog


Weaker Cash And Unimpressive Demand Keeps Pressure On Natural Gas Prices

Tuesday, October 08, 2019 at 4:11PM


After a couple of "up" days at the end of last week, natural gas prices declined for the second day in a row this week, with the prompt month November contract settling back under the $2.30 level today.

natural gas commodity weather

Prices initially were slightly higher early this morning, as the overnight weather models gained some forecast demand. Here, you can see the forecast demand profile from those overnight runs compared to 24 hours earlier:

natural gas commodity weather

One thing that sticks out is that even with the gain in demand, it remains rather unimpressive overall. We also are finally seeing cooler weather in the South, contributing to weaker daily cash prices. In our morning outlook to clients, we highlighted both the tame demand picture along with the risk of weaker cash prices, maintaining a "slightly bearish" stance, feeling like the bump in prices was not likely to last.

natural gas commodity weather

This worked out well, as prompt month prices moved as low as $2.266, but did close off those intra-day lows.

The midday weather models also gave back some of their overnight demand gains, which we had mentioned as a risk as well. Here is the 12-16 day pattern from the overnight GFS Ensemble:

natural gas commodity weather

The midday run shifted warmer in this time frame:

natural gas commodity weather

Now that we are closer to the time of year when weather becomes the primary factor that drives natural gas volatility, keeping up to date with potential weather changes is very important in the world of natural gas. We can help traders stay ahead of market moves with our blend of weather and natural gas fundamentals research. Sign up for a 10-day free trial here to take a closer look at all of the products we have to offer.