Here's the weather that affects the natural gas market. Cold causes an increase in residential heating. Hot causes an increase in residential cooling.
Previous natural gas discussions/threads
Previous discussions on natural gas here:
From Natural Gas Intelligence early this morning:
Look how fast the mild weather in December and early January caused us to close the storage gap below. But the gap widened some vs the 5 year average and last year again because of extreme cold several weeks ago.
We turned very chilly late last March into April with some unusually late season drawdowns............so the current deficit will erode during that time frame..............with mild weather and early season injections ahead.
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2014 through 2018. The dashed vertical lines indicate current and year-ago weekly periods.
EIA -36 bcf last Thursday.
NG market did not react much
|Working gas in underground storage, Lower 48 states Summary textCSVJSN|
billion cubic feet (Bcf)
|Region||03/22/19||03/15/19||net change||implied flow||Bcf||% change||Bcf||% change|
Totals may not equal sum of components because of independent rounding.
Working gas in storage was 1,107 Bcf as of Friday, March 22, 2019, according to EIA estimates. This represents a net decrease of 36 Bcf from the previous week. Stocks were 285 Bcf less than last year at this time and 551 Bcf below the five-year average of 1,658 Bcf. At 1,107 Bcf, total working gas is within the five-year historical range.
These were the 7 day temperatures and anomaly, ending the Friday before this last one, that went into this last Thursday's EIA report/number:
These were the 7 day temps, ending last Friday that will go into this Thursday's EIA number released at 9:30am Central.
These natural gas price charts aren't the greatest but they do show a likely seasonal bottom.
The Feb price dropped down and tested the Jan lows for the May contract which is now the front month and reversed higher.
Huge support in that zone on the yearly chart, with numerous trips down to between around 2.5 to 2.6 that solidly held.
After the spike higher from the record cold, natural gas has been struggling. Is the top in and we go against strong postive seasonal price action because of supplies hitting the market and expectations of a growing surplus later this year pressuring the price? Or will seasonal strength help to support the market?
NG 7 days
Natural gas 3 months below
Natural gas 1 year chart
This seasonal price chart below is for 2 decades, ending back in 2009. Not sure on what they use exactly to make their calculations but I've been following seasonal patterns since the early 90's(I paid thousands of dollars in the 90's to get seasonal charts for every commodity updated every 2 years) and this graph does a nice job at capturing the seasonality of natural gas.
The point of showing it is to show that natural gas has a strong historical tendency to go up from mid February into April.
The lows in Feb., would be perfectly timed with a typical, end of Winter low, which is followed by increasing prices over 80% of the time into early Spring.
One should also note that at this time of year, when most of the heating season is over, weather/cold temperatures that increases heating demand in the high population centers has less power to determine prices.............as long as supplies aren't precariously low(they are low but not extremely low) or the demand/supply fundamentals are not extremely tight. Fundamentals are actually pretty bearish........note the price is still fairly low even though storage is still less than the 5 year average.....because the market feels very comfortable...... is projecting additional storage gains from supplies gushing in.
Natural Gas Intelligence closing comments Monday:
Mother Nature had her own bag of April Fools tricks Monday as a late-season chill filled the air across much of the country, sending gas demand higher to start the week. With reported production coming in lower as well, the Nymex May gas futures contract rose 4.6 cents to settle at $2.708, while June climbed 3.6 cents to $2.749.
NGI early Tuesday comments:
NGI Tuesday PM:
Although high pressure that started building across the country eased natural gas demand and prices on Tuesday, early signals for more cold weather later this month limited any significant declines. The Nymex May gas futures contract slipped 2.4 cents to settle at $2.684. June fell 2.7 cents to $2.722
NGI Wednesday Morning:
metmike: Natural Gas prices have parted ways with temperature outlooks..............at least some of the time..........because its too late in the heating season to make a substantive difference in storage from HDD changes in the outlook.
I agree that projected HDD changes don’t have as much influence as during winter, but NG certainly was pushed up some (though not a lot) last April by cold and the cold April kept the net injection for the month well below average. And I do recall other Aprils when wx had either a bearish or bullish effect at least on some days based on changes in projected HD (CDD still way too low to have much influence even late in the month).
Today: the 0Z models were mixed vs 24 hours earlier with a somewhat colder EPS and warmer GEFS fwiw.
**Edit: I just looked at April monthly charts back to 2010 and NG closed higher than it opened every April 2010-2018. So, that combined with your 2 decade long based seasonal chart (combined with my data covers ~1990-2018) suggests a strong tendency for NG to rise during April.
Outstanding points Larry.
The Energy Information Administration reported a 23 Bcf injection into storage inventories for the week ending March 29, massively larger.
Closing comments: Large Storage Build Sends Natural Gas Futures Lower
billion cubic feet (Bcf)
|Region||03/29/19||03/22/19||net change||implied flow||Bcf||% change||Bcf||% change|
Friday Morning from Natural Gas Intelligence:
Following some overnight warming trends, and with the market continuing to mull the implications of the season’s first reported storage injection, natural gas futures were trading close to even early Friday. The May Nymex futures contract was down 0.1 cents at $2.642/MMBtu at around 8:30 a.m. ET.
It appears to me like NG got a slight boost (just over a penny) from a much colder 12Z Euro suite, especially for 4/11-15. There really was a significantly colder change vs the 0Z versions.
Yes the EURO 12Z Ensembles are significantly cooler. The 12Z GFS Ensembles are well below average as well. The Canadian is below average but not as much. Right now I am just selling puts and calls in UNG around what I feel will be a safe price. Much safer than the futures but it's like watching paint dry!
I agree completely with that!
A $100+ move/contract for natural gas is pretty tame by recent standards(back in December, the same solution would have caused a $1,500/contract spike) but considering all other factors were unchanged while the European ensembles came out and natural has been pretty dead, especially during that time frame, the buyers were definately hitting the offers on the way up more than the other way around after that solution was known.
Speaking of tame. That's a good thing for somebody short puts and calls.
Extremely strong seasonals have been more than offset by mild temperatures and increasing supplies, as well as last years late drawdowns in to early Spring..........which will close the storage gap vs 2018 in the next couple of weeks.
Prices really are cheap down here and we are close to major support............and storage is still near the bottom of the 5 year average. If the forecasts would continue to get colder during the next few days. one would think that ng should react positively.
The 11-15 day period for the just updated GFS ensembles was colder.
Closing comments from Natural Gas Intelligence:
Much like the rest of the week, there was little fundamental change Friday to move natural gas futures prices significantly in one direction or the other. The Nymex May gas futures contract climbed 2.1 cents to settle at $2.664, capping off a week in which prices budged less than a nickel each day. June also tacked on 2 cents to settle at $2.706.