Natural gas opened sharply lower, 4.527, then spiked down to test Thursday's spike low after the bearish EIA report(4.455)........but held and bounced back to 4.5.

The weather forecast has not changed a great deal, other than the fact that we have moved forward 2 days and are 2 days closer to the potentially much milder pattern after this week. 

One would think that we could take out that support below if the overnight maps look at least this mild or milder.

With the tendency early this cold weather season for the models to underestimate the amount of cold, it's possible that the forecast could turn colder too......

With storage being at 15 year lows right now, maybe a week of cold coming up, which will keep the cash market well supported can have more impact than usual.

I was actually surprised at how strong ng prices were on Friday from late morning on. With very mild extended maps and and the likelyhood of us coming in early this week, 2 days closer to the mild weather, I thought the market would end the day near the lows, anticipating what just happened on tonights open.

Instead we closed near the day session highs.

What do you think Larry and others?

Very low storage vs recent years

Working gas in storage was 3,054 Bcf as of Friday, November 23, 2018, according to EIA estimates. This represents  a net decrease of 59 Bcf from the previous week. Stocks were 644 Bcf less than last year at this time and 720 Bcf below the five-year average of 3,774 Bcf. At 3,054 Bcf, total working gas is  WELL below the five-year historical range.

       Last Thursday's drawdown -59 BCF.                                                                                                                                                                                                                                                                                                          

Here are the temperatures for the 7 day period(ending the previous Friday) for the last report that came out at 9:30 am Thursday.  

Another unusually big drawdown -59 bcf  for this early in the season but much smaller than the previous week and smaller than the market was expecting. 

These were the temperatures for the 7 days, ending last Friday for this Thursdays report. Still colder than average in  many of the high population centers of the Midwest and East but maybe  not AS cold as the previous week in some  areas.

So the drawdown should be a bit smaller.

Is the top in? Going to take some extreme cold  returning on in forecasts to get back up to the highs of 4.964 on December 14th.

Naturalgas3months

Repeating the frigid Winter of 5 years ago, gets storage to precariously low levels and the price spikes to the highest in over a decade. Based on the EIA projections and stats below, if we used up the same amount of gas this Winter, as we did 5 years ago, supplies would end up below 800 bcf(maybe not lower than that because extremely high prices would discourage some demand)!

Repeating the mild Winters of 2 and 3 years ago and storage catches all the way up with last year and prices get buried below $3 again by late Winter(with the huge amount of demand early in the heating season, that means the catching up might take longer now-early Spring with a mild Winter).

Right now EIA projects winter heating demand at about 6.6 TCF, and end of season inventories at 1.37 TCF on March 31st. Heating demand over the last 28 winters ranged from 5.7 TCF to 7.3 TCF, averaging 6.4. Here's the history from EIA:

Mike said: 

"I was actually surprised at how strong ng prices were on Friday from late morning on. With very mild extended maps and and the likelyhood of us coming in early this week, 2 days closer to the mild weather, I thought the market would end the day near the lows, anticipating what just happened on tonights open.

Instead we closed near the day session highs.

What do you think Larry and others?"

----------------------------------------------------------------

Mike,

 Yeah it was somewhat surprisingly strong, especially considering that the prior day's EIA draw came in well under the average guess, but it was end of month and the 12Z Fri Euro ens was actually colder than the prior run. And storage is still very low. So, it was not shocking by any means.

Mike said: 

"These were the temperatures for the 7 days, ending last Friday for this Thursdays report. Still colder than average in  many of the high population centers of the Midwest and East but maybe  not AS cold as the previous week in some many areas.

So the drawdown should be smaller a bit smaller."

---------------------------------------------------------------------------

Mike,

 There actually was the same # of HDD for the week ending Thu as the prior week ending Thu, which is what I use. Both weeks were at 170. Furthermore, last week's report was for Thanksgiving week, which has had a draw in the past that averaged well below what comparable non-holiday weeks had. Therefore, I actually expect this week's draw to be larger than the 59 draw of the prior report.

Thanks Larry!  I believe you. I need to fix my typo's in that statement too.

From Natural Gas Intelligence this morning:

Natural Gas Futures Called Lower as Weekend Forecasts Maintain Mid-December Warmth

     9:00 AM    

January natural gas futures were trading 31.5 cents lower at $4.297/MMBtu shortly before 9 a.m. ET Monday as forecasts over the weekend maintained expectations for a stretch of milder temperatures starting next week.

Days when every other energy is way up & gas is down really emphasize weather, so thanks.
Also, "typo's" is the best place to make one.

YW Patrick

Thanks also to WxFollower,

Closing comments from Natural Gas Intelligence:

January Natural Gas Plunges as Warming Trends Finally Catch Traders’ Attention

     5:48 PM    

Although last week offered glimpses of warmer temperatures forecast to arrive by the middle of December, recent volatility in weather models kept natural gas market bears treading lightly. That changed Monday when milder weather trends rolled into the medium range, sustained warmth to close out the month became a possibility and production data pointed to a new high.