Fwiw, I have these CDD comparisons for today's 12Z runs vs Fri at 12Z:
So, averaging out flat vs Fri at 12Z.
Thanks for getting us started Larry!
For those not familiar with those letters., the EPS is the European model Ensemble, the other one is the American model Ensemble. The 2 most important weather model products.
I think that you'll agree with me that those numbers will be plunging for the next week, as hot near term days get replaced by much cooler additional days at the end of the forecast.
If the week 2 forecasts continue to look this much cooler, I would be shocked if natural gas prices are this high next week. A strong case can be made for the highs to be in right now.
Residential cooling demand via electricity generated by burning natural gas, is approaching its seasonal peak. It's the most important market trading item with potential for big changes because of changes in the weather forecast(cooling degree days).
July is usually a weak month for natural gas prices and storage has been making huge gains but we have had some near record cooling demand in the forecast for the past 2 weeks which has lifted natural gas prices..............but the week 2 forecasts have been turning cooler the last couple of days here on Sunday Night. That might put some pressure on natural gas prices this week but there will be near record AC demand going on.
Sunday Weather: Cooler again week 2. Barry a bit farther north again.
Weather Monday: Pattern for cooler in week 2 continues. A bit more rain in week 2 on some guidance.
Weather Tuesday: Cooler again. More rain too.
Weather Wednesday: Temps about the same as yesterday with MUCH cooler weather coming after this heat breaks over the weekend. How much rain is the huge question not answered.
Previous weekly discussions on natural gas here(dang, this is getting to be long list)
Last weeks EIA report +81 BFC bearish but the upcoming heat mattered the most.
|Working gas in underground storage, Lower 48 states Summary textCSVJSN|
billion cubic feet (Bcf)
|Region||07/05/19||06/28/19||net change||implied flow||Bcf||% change||Bcf||% change|
Totals may not equal sum of components because of independent rounding.
Working gas in storage was 2,471 Bcf as of Friday, July 5, 2019, according to EIA estimates. This represents a net increase of 81 Bcf from the previous week. Stocks were 275 Bcf higher than last year at this time and 142 Bcf below the five-year average of 2,613 Bcf. At 2,471 Bcf, total working gas is within the five-year historical range.
For information on sampling error in this report, see Estimated Measures of Sampling Variability table below.
Latest Release Jul 11, 2019 Actual81B Forecast73B Previous 89B
|Jul 18, 2019||10:30||73B||81B|
|Jul 11, 2019||10:30||81B||73B||89B|
|Jul 03, 2019||12:00||89B||85B||98B|
|Jun 27, 2019||10:30||98B||101B||115B|
|Jun 20, 2019||10:30||115B||107B||102B|
|Jun 13, 2019||10:30||102B||109B||119B|
The dominant imposing factor for prices this year has been massive, record large injections that have increased supplies faster than any time in history and crushed prices.
The last 2 weeks, however featured increasing heat, so natural got a huge lift. The market will be reacting to changes in the cooling degree day forecasts this week, thru the rest of the Summer. We started the week under some early pressure from cooler week 2 forecasts on the US model. As long as there is no extreme heat in the forecast, natural gas can continue lower. Widespread heat needs to continue to keep prices up here.
NG 7 days
Natural gas 3 months below
This shows that natural gas has a strong historical tendency to go up after mid February to mid June. This years extraordinary, contra seasonal plunge lower has been the result of super duper, huge, injections...records by a wide margin........ that have provided numerous bearish surprises and crushed prices. Cash prices during this period have been below $2 at times. We are now in a time frame when ng seasonals become very negative, from mid/late June thru August.
Widespread, intense heat has given us a huge bounce at a time when ng prices normally drop. If the heat ends, ng prices could drop back down to the lows.
Maxar is forecasting two of the six hottest days since 1950 on a US energy usage weighted cooling degree day basis for 7/19-20:
7/20/19’s 16.43 CDDs would rank 2nd hottest to only 7/22/11’s 16.87
7/19/19’s 15.9 would actually be the hottest day since 7/22/11 though 7/20/19 would then eclipse 7/19/19
Thanks much Larry. That's good info to know.
The market obviously dialed all that in earlier this month when we spike higher as it showed up in the 2 week forecasts.
Now we go lower because the 2 week forecasts are cooling us off:
Natural Gas Intelligence from earlier this morning:
These much above temperatures are coming as we are almost at the seasonal/climatological peak in temperatures, which adds to what is usually around the highest CDD period of the year averaged out.
NG getting pretty volatile here.........the 12z operational US model was MUCH hotter(less cooling week 2) but not the ensemble.
Natural Gas Intelligence after the close on Monday:
With forecasts showing milder temperatures later this month, and with the market assessing former Tropical Storm Barry’s full impact on the fundamentals, natural gas futures prices sold off Monday. In the spot market, Gulf Coast and Southeast locations saw mostly discounts as what remained of Barry moved inland; the NGI Spot Gas National Avg. eased 2.0 cents to $2.260/MMBtu.
From Natural Gas Intelligence Tuesday Morning:
Natural Gas Intelligence closing comments Tuesday:
Faced with further signs that strong heat this week won’t have staying power, natural gas bulls acquiesced to sharp discounts in the futures market Wednesday. Meanwhile, a weak spot market response to near-term forecasts showing some of the hottest conditions of the summer so far reinforced the bearish sentiment on the day; the NGI Spot Gas National Avg. slid 10.0 cents to $2.160/MMBtu.
NGI Wednesday morning: Guidance Shifts Cooler Overnight; Natural Gas Futures Slightly Higher After Sell-Off
Natural gas futures paused for a breather Wednesday as the market continued to await any sign of the next bullish weather catalyst. Meanwhile, the spot market displayed indifference to the “dangerous heat” building over the populated Midwest and East regions to close out the week; the NGI Spot Gas National Avg. added 0.5 cents to $2.165/MMBtu.