Monday, December 09, 2019 at 7:08PM
Natural gas prices gapped lower Sunday evening, with prompt month prices falling as low as 2.158 before rebounding somewhat, though still closed today just over 10 cents lower than back on Friday. This also marked the lowest close of the life of the current January contract. The reason for the leg lower? As is most often the case at this time of the year, the weather is to blame. Our "Pre-Close" update sent out to clients back on Friday highlighted this risk, taking a slightly bearish stance, despite the market having sold off considerably already at the end of last week. The change wound up even exceeding our expectations, with both the GEFS and the ECMWF EPS showing very large warmer changes compared to the last runs the market saw back on Friday afternoon. Today's models did bend back marginally colder, but the damage had been done, with the overall pattern over the next couple of weeks now set to average warmer than normal in key areas for natural gas consumption, as seen in our official forecast maps. While lower prices appear to be contributing to stronger trends in the supply / demand balance, it is not enough to support the market as long as weather stays warmer. Is this warmer change sustainable, or will this week's models gravitate back toward the colder side? Let us help keep you a step ahead of key market changes. Sign up for a 10-day FREE trial here to take a look at what our latest research is indicating as we move forward.