Here are the HDD comparisons for Today at 12Z vs Fri at 12Z:
GEFS: ~-25 (warmer early and near wash late)
EPS: ~0 (warmer early and colder late)
As a result of the above as of 12Z today, the GEFS is only 2 HDD colder than the EPS for 1/6-19 and the EPS is actually colder than the GEFS late in the run (1/19-20), neither of which has occurred very often due to the tendency of the GEFS to be significantly colder than the EPS.
-------------------------------------------------------------------------------------
Looking ahead to mid month (~1/14), the extremely rare combo of the following is forecasted:
- a very strong ~3 amplitude MJO in warm phases 4/5, which would make it in the top 4 for strongest 4/5 in winter since records started in 1975
- ~-2 PNA, typically only a once in several decade occurrence in winter
- ~+3 AO
- +0.8 NAO
This combo is almost like 7-7-7-7 coming up on the wx index slot machine for extreme warmth in the SE 1/3 of the US centered around 1/14. I'd venture to say that this combo is the strongest in our lifetimes if we had had records going back that far. As it is, it is easily the strongest since at least 1975!
Thanks Larry,
Looks like the open will not be too much different than the close, maybe a tad higher or lower?
However, orders that go in during the last minute can often change that quickly.
The close Fri (4pm) was 2.114 and open just now was 2.112
We had a quick trip down to 2.099 for the low a few seconds after the open and are back to the close on Friday 2.114.
Extremely tame for a natural gas Sunday NIght open in January.
I'm still looking at this as a buying set up with the amazing warmth that Larry has been discussing being there long enough that its not going to entice new aggressive shorts.
OK, we are 2.119 for the high so far.
Feb Natural gas got to 2.333, which was above the 1:30pm, higher close on Friday but doesn't have a compelling reason to move strongly in either direction at the moment.
Weather models overnight, if they are warmer and especially if they are colder will change that.
If we came in early Monday with a completely mild 2 week forecast for the Midwest/East, its conceivable that the big funds might try to establish another leg down.........towards $2.
I think that the colder 18Z GFS vs 12Z to a little extent (though GFS runs are often very jumpy) and especially the colder 18Z GEFS (11 more HDD vs 12Z) are propping it up somewhat right now along with the slightly colder late week 2 EPS still being fresh enough to be on the minds of some
Last weeks wimpy EIA number:
-58 BCF neutral
Working gas in underground storage, Lower 48 states Summary textCSVJSN | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Historical Comparisons | |||||||||||||||||||||||||
Stocks billion cubic feet (Bcf) | Year ago (12/27/18) | 5-year average (2014-18) | |||||||||||||||||||||||
Region | 12/27/19 | 12/20/19 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
East | 771 | 796 | -25 | -25 | 663 | 16.3 | 758 | 1.7 | |||||||||||||||||
Midwest | 905 | 923 | -18 | -18 | 801 | 13.0 | 904 | 0.1 | |||||||||||||||||
Mountain | 173 | 177 | -4 | -4 | 147 | 17.7 | 180 | -3.9 | |||||||||||||||||
Pacific | 251 | 260 | -9 | -9 | 220 | 14.1 | 287 | -12.5 | |||||||||||||||||
South Central | 1,093 | 1,094 | -1 | -1 | 875 | 24.9 | 1,101 | -0.7 | |||||||||||||||||
Salt | 313 | 309 | 4 | 4 | 293 | 6.8 | 329 | -4.9 | |||||||||||||||||
Nonsalt | 780 | 786 | -6 | -6 | 582 | 34.0 | 773 | 0.9 | |||||||||||||||||
Total | 3,192 | 3,250 | -58 | -58 | 2,708 | 17.9 | 3,230 | -1.2 | |||||||||||||||||
Totals may not equal sum of components because of independent rounding. |
Working gas in storage was 3,192 Bcf as of Friday, December 27, 2019, according to EIA estimates. This represents a net decrease of 58 Bcf from the previous week. Stocks were 484 Bcf higher than last year at this time and 38 Bcf below the five-year average of 3,230 Bcf. At 3,192 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.
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.
Latest Release Jan 03, 2020 Actual-58B Forecast-57B Previous-161B
https://www.investing.com/economic-calendar/natural-gas-storage-386
Release Date | Time | Actual | Forecast | Previous | |
---|---|---|---|---|---|
Jan 09, 2020 | 10:30 | -58B | |||
Jan 03, 2020 | 10:30 | -58B | -57B | -161B | |
Dec 27, 2019 | 10:30 | -161B | -148B | -107B | |
Dec 19, 2019 | 10:30 | -107B | -90B | -73B | |
Dec 12, 2019 | 10:30 | -73B | -76B | -19B | |
Dec 05, 2019 | 10:30 | -19B | -22B | -28B |
One of the most bearish 7 day temperature periods in Winter history. The drawdown, as a result was one of the smallest for that period.
Look at the incredible positive anomalies below. Wow! +16 deg. F in Chicago vs average for the entire week.
These were the temps, ending last Friday that occurred for this Thursdays report.
WOW! Another dinky drawdown.
Watch out for those dinky drawdowns............if you're a bull (-:
January 5th: Seasonals are lower now, until mid/late February, when they turn up with the strongest upward price movement seasonal signal of the years from then to mid June.
After a couple of weeks of near record warmth in the Eastern half of the country recently, if the pattern shifts to cold, seasonals won't matter......prices should go higher.
Dec. 25th:
Regarding seasonality, price strength often seen in early/mid Dec. fades in late December and seasonals are actually lower/weaker from late December thru mid February, when prices often start their very reliable seasonal increase in the Spring. Temperatures will matter more than these historical tendencies during January.
Dec. 16th:
I'm repeating my comments from last week below because they explain some of the recent strength in NG prices, despite the lack of bitter cold:
Dec. 9th:
The main thing about the seasonal graph below to know is that prices in late November ALWAYS go down when its mild and almost always go down with average temperatures.......this happened in 2019.
In early/mid December, however, seasonals turn positive, which is lending some support here(along with extremely low prices and lots of warm dialed in)
This seasonal price chart below is for 2 decades, ending back in 2009.
The price chart below is for the front month February.
Dec. 9th:
Natural gas 3 months below
Record heat in September caused the spike higher.
Record cold in early November caused the spike higher to end Oct/early November.
Now we have a distinct double top, that will not be violated any time soon and only if the 2nd half of Winter featured sustained brutally cold temperatures.
We are easily at contract lows with the massive daily and weekly gap lower Sunday PM not showing up on the chart below but described on the 2nd post of this thread.
This gap was filled and served as an exhaustion gap formation (gap and crap) at the end of a strong price move lower. Which suggests the market will be unable to make new lows for awhile.
Dec. 16th:
The gap and crap exhaustion early last week, along with strong seasonals and very low prices has been signalling higher prices. A big sign of this has been the markets refusal to go lower during and after some key guidance has come out much milder. A long time bearish market that stops reacting to bearish news has often hit a bottom(at least short term). If it get warms enough for long enough, prices can still make new lows but the market psychology has changed/reversed since the open on Sunday Night, Dec 8th when we had a panic selling surge on the open that caused a massive gap lower. Last Tuesday had some lingering selling enthusiasm but now, the market is putting a more bullish spin on the weather(often ignoring bearish wx and focusing on bullish wx potential)
Dec. 25th. The price chart below does not show the new, bearish gap lower from this last Sunday Night, which negated the gap and crap selling exhaustion from the previous week, as we are trading below that now and the Sunday gap is still wide open. We tested the contract lows on Friday.......and they held solidly.
On Dec. 9th we spiked down to 2.158, the contract low. On Friday, we dropped to 2.162 on the January contact..the test. We are at 2.213 right now. We got to 2.188 earlier this evening but bounced nicely off there.
Actually, there's numerous factors that could jerk us quickly in one direction if they line up.
1. EIA report out Friday
2. Contract expiration Friday
3. Seasonals turn modestly lower here to mid Feb. -minor short term factor
4. Cheap prices
5. Record fund short
6. Weather, weather, weather..........big changes in weather will get more weight than the others combined.
January 5th: The near record warmth in forecasts pressed prices to new contract lows last week, 2.083 NGG last Friday, very early morning. We bounced quickly from there on late week 2 cold threats on models at that time. Prices opened to start the new trading week, a tad lower but have garnered some strength on forecasts that are slightly colder(mainly the GFS operational from the last 2 runs. 18z and 0z. The last 12z EEnsemble was also colder. The models are not agreeing on the amount of cold coming up.
Natural Gas Intelligence early Monday morning:
Natural Gas Futures Called Higher as Guidance ‘Marginally Colder’
metmike: I'm not impressed with the cold, which spurts in then retreats.
The AO and PNA suggest we are going to have a very hard time keeping sustained cold in the East and are not changing enough at the end of 2 weeks to be convincing right now. But its weather and that far out can look different pretty quickly.
Larry,
Thanks again for getting the week started with a wonderful analysis.
EE came out much colder late in the period and caused sustained buying at higher levels after 1:30pm.
Hitting the offers type buying on the way up.
The 0z runs of the overnight models were warmer and pressured ng to spike to a low just above 2.1 and testing the Sunday Night open lows.
Since then, solid strength has dominated.
12z GFS operational was MUCH colder and gave us the spike high just above 2.``16.
Ensembles were a bit colder too but want to resume the pattern Larry has been telling us about since last Friday..........trough West, ridge East couplet that keeps cold intrusions to the East, especially Southeast temporary.
The mother load of cold is going to bodily shift eastward at the end of week 1 into early week 2. This is probably the most bullish part of the forecast. Maybe we will see moderation after that?
Weather Tues
https://www.marketforum.com/forum/topic/45462/
NGI early this morning:
Models Again Shift Warmer as February Natural Gas Called Lower
Weather Wednesday: https://www.marketforum.com/forum/topic/45528/
All 12z ensembles were MUCH colder with a new pattern to colder towards the end of week 2!!
Light Storage Withdrawal Expected as Natural Gas Futures Ease Lower
5:33 PM
The prospect of a much-smaller-than-average inventory pull, coupled with a rash of mild temperatures over the next week and uncertainty surrounding the longer-range forecast, kept the pressure on natural gas futures Wednesday.
Much colder week 2 guidance in the late am/early pm gave ng some good buying/strength the last several hours as we came back from being moderately lower earlier, to finish close to unchanged for the day.
18z Operational GFS continues to be milder though but the ensembles continue to be colder in week 2, consistent with the 12 EE and 12z Canadian ensembles.
This is the strongest evidence in weeks that the pattern may finally change beyond 10 days.
From the current anomalous trough in the West, ridge East to just the opposite.
Should this occur, the cold air masses will be aimed farther east and the West will warm up later in January.
The EIA # tomorrow will be mega bearish but the market must already know this because we had the incredibly milld weather for that period last week. Scroll up to see those temps.
metmike: The European model came out much milder overnight and caused tons of selling pressure immediately, shortly after midnight.
Despite this, the Canadian model is still looking potentially very cold and the 6z GFS products came out colder.
So we have big difference in the solutions.
European-Warm
US/Canada-Colder
NGI:
Market Bracing for Lighter-Than-Normal Withdrawal; Natural Gas Futures Called Lower
8:57 AM
for week ending January 3, 2020 | Released: January 9, 2020 at 10:30 a.m. | Next Release: January 16, 2020
-44 BCF a bit bearish but no surprise because it was so mild.
Working gas in underground storage, Lower 48 states Summary text CSV JSN | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Historical Comparisons | |||||||||||||||||||||||||
Stocks billion cubic feet (Bcf) | Year ago (01/03/19) | 5-year average (2015-19) | |||||||||||||||||||||||
Region | 01/03/20 | 12/27/19 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
East | 756 | 771 | -15 | -15 | 652 | 16.0 | 725 | 4.3 | |||||||||||||||||
Midwest | 885 | 905 | -20 | -20 | 768 | 15.2 | 854 | 3.6 | |||||||||||||||||
Mountain | 166 | 173 | -7 | -7 | 134 | 23.9 | 168 | -1.2 | |||||||||||||||||
Pacific | 244 | 251 | -7 | -7 | 206 | 18.4 | 269 | -9.3 | |||||||||||||||||
South Central | 1,097 | 1,093 | 4 | 4 | 867 | 26.5 | 1,058 | 3.7 | |||||||||||||||||
Salt | 323 | 313 | 10 | 10 | 301 | 7.3 | 317 | 1.9 | |||||||||||||||||
Nonsalt | 774 | 780 | -6 | -6 | 566 | 36.7 | 741 | 4.5 | |||||||||||||||||
Total | 3,148 | 3,192 | -44 | -44 | 2,627 | 19.8 | 3,074 | 2.4 | |||||||||||||||||
Totals may not equal sum of components because of independent rounding. |
Working gas in storage was 3,148 Bcf as of Friday, January 3, 2020, according to EIA estimates. This represents a net decrease of 44 Bcf from the previous week. Stocks were 521 Bcf higher than last year at this time and 74 Bcf above the five-year average of 3,074 Bcf. At 3,148 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.
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.
Operational GFS came out VERY cold again.
Ensembles not as cold but continue to track colder for several days so more HDD's.
Instead of a spike higher, we had a drift higher that made new daytime highs by a few ticks each time, then couldn't hold and we got back down to unch.
Now trading just above that.
Thursday's weather: https://www.marketforum.com/forum/topic/45579/
The reason that we've managed to trade higher after the bearish EIA number is because of the threat of much colder temps ahead.
The previous run of the European model did not thing so, however.
If/when all the models agree, the price will likely move in the direction they suggest.........higher if they are all colder.........lower if they all go back to warmer.
My last several trades have been from the long side but we will need even more cold than this for me to be long again.
12z European model shifted drastically and now is lined up with the colder GFS and Canadian model products.
Week 2 is looking MUCH colder for the eastern half of the country.
NWS has also shifted its cold risks farther east..and south, than yesterday and in areas that were supposed to be above normal temps in the forecasts from earlier this week.
NGI after the close on Thursday:
Natural Gas Futures Gain as Market Eyes Possible End to ‘Blowtorch Regime’
Amazing that models have turned this cold since early Thursday morning and natural gas is unable to make new highs for the week.
In fact, it's been unable to take out highs from earlier today.
This is a market not that worried about extreme cold because supplies are so high with half of Winter gone and another small drawdown next week and probably the week after that(on the EIA reports).
If the intensity of the cold forecast continues, one would think that it would turn more supportive as we get closer to the cold.
If the models shift back to milder(which has been getting less likely the last couple of runs), prices could collapse to new contract lows.
We took out Thursday's high of 2.170 with a quick spike to 2.176 from hitting lots of buy stops above that level, then came back to just below 2.170..........instead of continuing higher, like bullish markets usually do when they break thru resistance.
We are right at 2.170 currently.
Everything is pretty bearish for ng right now..........seasonals, storage/supplies, fundamentals, the next few days of weather..........but there is one potentially very bullish item.............a weather pattern change to much colder later this month.
European model came out much warmer and spiked us lower after midnight which provided a good spot to buy as the last GFS ensemble came out much colder in week 2 and we are testing the highs again
We finally took out the highs from last evening. Let’s see if we can add to that and get some fund short covering if....big if this pattern change to much colder stays.
NGI early Friday:
Colder Theme Seen Taking Hold for Final Third of January; Natural Gas Futures Called Higher
8:49 AM
With guidance appearing to settle on an overall colder theme for later this month, natural gas futures added several cents in early trading Friday. The February Nymex contract was up 4.0 cents to $2.206/MMBtu at around 8:30 a.m.
metmike: The lows are in now unless there would be a huge shift in the weather models back to mild. Although the European model was much milder overnight, it still suggested the much colder weather pattern change at the end of 2 weeks that the other models are gung ho on.
It should be noted that we will need some major cold in sustained fashion in the high population centers in the Midwest to East/South to offset the other bearish fundamentals and the negative seasonals at this time.
If the models suddenly turn mild again, this was just a dead cat bounce/blip.
The 12z operational GFS was incredibly milder. Had to exit longs when it started coming out that way.
Don't want to be long if guidance looks warmer.
However, the GFS ensemble looks like it will be colder in week 2(after being milder in week 1)
So ng has a chance to go back up.
The European models will be start coming out, starting in less than an hour.
Friday's weather(colder GFS overnight- but 12z operational milder-12z ensembles still pretty cold-European model NOT as cold).
Huge model differences.
IF the cold doesn't show up, the bull will die quickly. However, cross polar flow will mean the brand of cold coming from any cold fronts from Canada will be frigid.
Sustained frigid weather, should that be the new pattern late this month into February could inspire some short covering from the record shorts of big funds.
This is the lowest number since early December 2016, over 3 years ago.
https://ycharts.com/indicators/us_gas_rotary_rigs
119.00 for Wk of Jan 10 2020
Data for this Date Range | |
---|---|
Jan. 10, 2020 | 119.00 |
Jan. 3, 2020 | 123.00 |
Dec. 27, 2019 | 125.00 |
Dec. 20, 2019 | 125.00 |
Dec. 13, 2019 | 129.00 |
Dec. 6, 2019 | 133.00 |
Nov. 27, 2019 | 131.00 |
Nov. 22, 2019 | 129.00 |
Nov. 15, 2019 | 129.00 |
Nov. 8, 2019 | 130.00 |
Nov. 1, 2019 | 130.00 |
Oct. 25, 2019 | 133.00 |
Oct. 18, 2019 | 137.00 |
Oct. 11, 2019 | 143.00 |
Oct. 4, 2019 | 144.00 |
Sept. 27, 2019 | 146.00 |
Sept. 20, 2019 | 148.00 |
Sept. 13, 2019 | 153.00 |
Sept. 6, 2019 | 160.00 |
Aug. 30, 2019 | 162.00 |
Aug. 23, 2019 | 162.00 |
Aug. 16, 2019 | 165.00 |
Aug. 9, 2019 | 169.00 |
Aug. 2, 2019 | 171.00 |
July 26, 2019 | 169.00 |
July 19, 2019 | 174.00 |
July 12, 2019 | 172.00 |
July 3, 2019 | 174.00 |
June 28, 2019 | 173.00 |
June 21, 2019 | 177.00 |
June 14, 2019 | 181.00 |
June 7, 2019 | 186.00 |
May 31, 2019 | 184.00 |
May 24, 2019 | 186.00 |
May 17, 2019 | 185.00 |
May 10, 2019 | 183.00 |
May 3, 2019 | 183.00 |
April 26, 2019 | 186.00 |
April 18, 2019 | 187.00 |
April 12, 2019 | 189.00 |
April 5, 2019 | 194.00 |
March 29, 2019 | 190.00 |
March 22, 2019 | 192.00 |
March 15, 2019 | 193.00 |
March 8, 2019 | 193.00 |
March 1, 2019 | 195.00 |
Feb. 22, 2019 | 194.00 |
Feb. 15, 2019 | 194.00 |
Feb. 8, 2019 | 195.00 |
Feb. 1, 2019 | 198.00 |
Obviously, increasing storage and low prices are having an impact in the ng business.
In the last 2 years, especially the last year, we went from a huge deficit to a surplus, not only vs the previous year(+521 bcf) but also the 5 year average(+74 bcf). Storage levels defined the bottom of the 5 year storage charts from late 2017, thru all of 2018 into early 2019...........then we gained massive amounts vs averages/prior years and are now above the 5 year average for the first time in years.
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.
NGI after the close Friday:
Natural Gas Futures Rally as ‘Weekend Risk’ Expected From Forecasts
5:47 PM
The prospect of a return to something resembling winter temperatures later this month provided enough impetus Friday to lift natural gas futures ahead of another potentially pivotal weekend of weather data. The February Nymex contract picked up 3.6 cents to settle at $2.202/MMBtu; March settled at $2.168, up 2.0 cents.
Saturday's weather: https://www.marketforum.com/forum/topic/45701/
Weather Sunday:
https://www.marketforum.com/forum/topic/45737/
Up until the 12z guidance came out this morning, I would have guessed higher this evening. We did open higher but have had lots of selling pressure.
The 12z operational GFS, ensemble and EE came out milder, then the 18z GFS operational model came out MUCH milder and the 18z ensemble milder............so it explains why we have dropped a bit during the first 30 minutes.
Since I think the pattern will get colder and colder with time and maybe these milder models for 2 runs will reverse back, I am still preferring the long side at the moment.
As noted Friday, if the cold does not show up, ng has the potential to drop hard still.
The 7 day temperature map for the period used for this weeks EIA report on Thursday at 10:30 am is below. Another incredibly mild week across much of the country. In fact, anomalies of +8 deg. or greater dominate from the northeast Rockies across the entire Midwest high population areas into N.TX, across the South/Southeast to the Mid Atlantic states..........where alot of people were NOT using much natural gas for heating.
So we will see another dinky drawdown with certainty vs the historical average at a time of year when we climatologically are approaching/having our coldest weather.
This will add to the growing(big) surplus vs last year and the now growing surplus with the 5 year average.
The report for next week, Jan. 23, 2020 will also be small but not as low as the previous 3 dinky drawdowns but we know most of the weather that will go into those reports already, so its mostly dialed into the price.
After that, the drawdown for Jan. 30, 2020 will be back close to or even slightly above average for the last week in January(depending on how cold it gets NEXT WEEK). Speculating beyond that, the pattern change to colder, if it amplifies, will start a period with bigger than average drawdowns during the first 2 weeks in February........which is really speculating in the world of weather.
There may be quite a battle between the northern stream and southern stream with potential, at least initially for the northern stream air masses to originate from Siberia with cross polar flow and at least the Arctic..........so the temperature gradient between very cold and milder to the south may be great enough to cause large shifts in HDD forecasts from changes(north or south) in the location of the boundary/fronts.
The operational models will be extreme and unreliable at times but an example was the last 18z GFS Operational model. The run from 12 hours ago had a stout 382 Heating Degree Days vs the average of 355(that includes some very mild weather the first 5 days)....so pretty chilly after that.........which was the theme for late last week when we saw prices advance.
Now, the 18z run has just 340 HDD's, with week 2 still featuring below average temps but no long MUCH below average for much of the time.
My guess is that we will start getting colder again overnight but it feels like I am biased towards the long side here.
Latest Release Jan 09, 2020 Actual-44B Forecast-53B Previous-58B =Bearish
https://www.investing.com/economic-calendar/natural-gas-storage-386
Release Date | Time | Actual | Forecast | Previous |
---|
Jan 16, 2020 | 10:30 | -44B | |||
Jan 09, 2020 | 10:30 | -44B | -53B | -58B | |
Jan 03, 2020 | 10:30 | -58B | -57B | -161B | |
Dec 27, 2019 | 10:30 | -161B | -148B | -107B | |
Dec 19, 2019 | 10:30 | -107B | -90B | -73B | |
Dec 12, 2019 | 10:30 | -73B | -76B | -19B |
Guidance Still Showing Colder Pattern for Next Week; Natural Gas Futures Called Slightly Higher
8:52 AM
A skeptical natural gas futures market remained in wait-and-see mode early Monday as forecasts continued to suggest a move away from the seemingly endless warm pattern that has dominated January to this point. February Nymex futures were up 1.2 cents to $2.214/MMBtu shortly after 8:30 a.m. ET.
metmike: High confidence for it to turn colder, starting later this week with new warm/west, cold east pattern. Question is........will it be cold enough to push ng much higher?
Or maybe when will it do that with new highs?
Monday weather: Colder pattern in the making!!!!
Natural Gas Intelligence after the close Monday:
Cold Shift Not Impressing Natural Gas Futures Market as Prices Slide
5:34 PM
Apparently not impressed by forecasts showing a shift to colder temperatures starting next week, natural gas traders sent futures prices a few pennies lower Monday. After trading as high as $2.226/MMBtu and as low as $2.163, the February Nymex contract settled at $2.182, off 2.0 cents. March slid 1.0 cent to $2.158
Demand Outlook ‘Much Better’ Starting Next Week; Natural Gas Futures Called Higher
8:53 AM
With forecasts continuing to point to a return to more seasonal temperatures and stronger demand by next week, natural gas futures were trading a few cents higher early Tuesday. The February Nymex contract was up 3.6 cents to $2.218/MMBtu shortly after 8:30 a.m. ET.
Weather Tuesday: Same colder pattern.
I sold a put yesterday and bought it back today for a nice gain. Kind of wish I would have held on to it seeing the extended forecast but I hate to see profit and not take it. If the price drops tomorrow I may see about selling another put. On question I have, is where do we find the forecast injection or withdrawal? I always see it on the report but does a prediction report come out? Thanks
Good question grant. I have no idea.
Larry will post it from time to time but he may have a service that he pays for to get it.
Larry, is there a site we can go to for the ng EIA estimates?
The site below sometimes has it but the number they give often seems way off. No number yet for this week:
https://www.investing.com/economic-calendar/natural-gas-storage-386
Release Date | Time | Actual | Forecast | Previous | |
---|---|---|---|---|---|
Jan 16, 2020 | 10:30 | -44B | |||
Jan 09, 2020 | 10:30 | -44B | -53B | -58B | |
Jan 03, 2020 | 10:30 | -58B | -57B | -161B | |
Dec 27, 2019 | 10:30 | -161B | -148B | -107B | |
Dec 19, 2019 | 10:30 | -107B | -90B | -73B | |
Dec 12, 2019 | 10:30 | -73B | -76B | -19B |
Rally Fizzles for Natural Gas Futures as European Data Seen Trending Milder
5:07 PM
Natural gas futures seemed poised for a modest rally Tuesday but ultimately failed to launch as weather data eased off on the intensity of late-January cold. After trading as high as $2.255/MMBtu early in the session, an afternoon slump left the February Nymex futures contract at $2.187, up 0.5 cents on the day. March fell 0.7 cents to settle at $2.151.
metmike: They are exactly right on the market going straight down in the later stages of the Euro and its ensembles coming out. From sharply higher to around unch from just after noon until 1: 30pm.
The exact opposite happened (earlier in the morning) after 4:20am, when the GFS and ensemble came out colder........sustained upward pressure from buying.
Wednesday Morning NGI:
Warmer Euro Model Sinking Natural Gas Futures Early
8:59 AM
metmike: The last 6z GFS ensemble was also warmer
Grant,
The weekly EIA number I get is from a private service, ODJ news. However, the NGI articles that Mike links us to also have estimates on Wednesdays.
Thanks Larry!
Wednesdays weather: https://www.marketforum.com/forum/topic/45882/
Much milder than just over 24 hours ago.......especially the European model.
Thanks Larry.
This source is going -95 bcf.
https://www.investing.com/economic-calendar/natural-gas-storage-386
Release Date | Time | Actual | Forecast | Previous | |
---|---|---|---|---|---|
Jan 16, 2020 | 10:30 | -95B | -44B | ||
Jan 09, 2020 | 10:30 | -44B | -53B | -58B | |
Jan 03, 2020 | 10:30 | -58B | -57B | -161B | |
Dec 27, 2019 | 10:30 | -161B | -148B | -107B | |
Dec 19, 2019 | 10:30 | -107B | -90B | -73B | |
Dec 12, 2019 | 10:30 | -73B | -76B | -19B |
for week ending January 10, 2020 | Released: January 16, 2020 at 10:30 a.m. | Next Release: January 23, 2020
-109 Bullish!
Working gas in underground storage, Lower 48 states Summary text CSV JSN | |||||||||||||||||||||||||
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Historical Comparisons | |||||||||||||||||||||||||
Stocks billion cubic feet (Bcf) | Year ago (01/10/19) | 5-year average (2015-19) | |||||||||||||||||||||||
Region | 01/10/20 | 01/03/20 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
East | 716 | 756 | -40 | -40 | 624 | 14.7 | 677 | 5.8 | |||||||||||||||||
Midwest | 851 | 885 | -34 | -34 | 734 | 15.9 | 796 | 6.9 | |||||||||||||||||
Mountain | 161 | 166 | -5 | -5 | 128 | 25.8 | 159 | 1.3 | |||||||||||||||||
Pacific | 235 | 244 | -9 | -9 | 197 | 19.3 | 256 | -8.2 | |||||||||||||||||
South Central | 1,076 | 1,097 | -21 | -21 | 862 | 24.8 | 1,002 | 7.4 | |||||||||||||||||
Salt | 320 | 323 | -3 | -3 | 303 | 5.6 | 297 | 7.7 | |||||||||||||||||
Nonsalt | 756 | 774 | -18 | -18 | 558 | 35.5 | 705 | 7.2 | |||||||||||||||||
Total | 3,039 | 3,148 | -109 | -109 | 2,545 | 19.4 | 2,890 | 5.2 | |||||||||||||||||
Totals may not equal sum of components because of independent rounding. |
Working gas in storage was 3,039 Bcf as of Friday, January 10, 2020, according to EIA estimates. This represents a net decrease of 109 Bcf from the previous week. Stocks were 494 Bcf higher than last year at this time and 149 Bcf above the five-year average of 2,890 Bcf. At 3,039 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.
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.
Thursdays Weather: https://www.marketforum.com/forum/topic/45922/
So much for that bullish rally. Wow that 12Z EURO came in warm. At this rate NG may be free soon. :-)
The 12Z Canadian and GFS ensembles still show colder than normal temperatures for much of the U.S. towards the end of the month into February while the EURO is showing slightly warmer than average temperatures around the Great Lakes and Midwest as we end January. I have a hard time believing we won't see enough cold air in the forecast to drive this price up to 2.20 or so.
I need it to get back to around 2.15. I have a NGH20 contract. Really wish I would have stuck to selling puts but I didn't. I will look at selling a call or two tomorrow to offset my loss. Worried this will drop below 2.00 and then I will have to cut my losses.
Yeah, that 12z EE was incredibly warmer. 24 less HDD's which is a ton for an ensemble in just 1 run.
I was short during the GFS run coming out much milder but got stopped out when we came back close to where I got in. The market wanted to hold on the plus side until the massively milder EE came out. The days 9-10 maps of the operational model were looking really warm and in retrospect, that was the time to sell with no drawdown........when the aggressive selling took over and never stopped as each map on the EE kept adding warmth and taking away more HDD's and the price kept dropping until we hit new contract lows.
We are just below the previous contract low here, which was 2.083.
It looks too warm to be long for me but that would be the ideal trade on models turning sharply colder.............but the trend has been just the opposite.
NGI after the close:
Weather Rules as Natural Gas Futures Slide Despite Bullish EIA Storage Miss
5:16 PM
The larger than expected drawdown was bullish but we have over 3 TCF of natural gas in storage with half the Winter gone and no sign of sustained major cold(forecasts are getting milder and milder) at a time of year when the front month seasonals are weak.
The pattern change to much colder that looked very likely early this week is gone.
You probably noticed the just updated Euro weeklies came out pretty cold, being +140 HDD's vs average during that period. If today's bullish EIA number means anything (and future drawdowns are like that) and the we did have that much cold, there could be a good opportunity for natural gas to rally............but only when the 2 week forecasts the market trades on like religion, changes to colder.
Those forecasts beyond 2 weeks rarely verify because of model skill(lack of it)
The 18z GFS and ensemble is coming out milder and pressuring prices from the open.
I see that. Very mild temperatures. We'll see how long I can hold on.
If suddenly the models turned sharply colder overnight (which looks unlikely) this would be the perfect place for a reversal higher from new contract lows.
I'm saying this for 2 reasons.
1. It would be a potential home run entry point for me buying with somewhat limited downside risk.
2. It identifies what needs to happen to quickly bail you out.
Prices are the lowest for this time of year since? Not sure but they are cheap.
At what point does the price get low enough so that even really warm weather can't push it lower because its so far below fair value?
The problem with basing a trade on that is that as we get lower, even well below fair value we could get into some short term panic selling by longs or maybe hedges put on earlier that result in a huge short term spike lower below $2 and below what anybody expected..........that puts in a selling exhaustion low at some impossible to predict price which we don't return to for a very, very long time.
This is the downside risk and if the weather forecasts keep getting warmer, there's not telling how low.
One might guess that we would have interested buyers from a value standpoint at $2 but it would be the opposite...........we crack $2 and we have longs under water, crying uncle and all getting out with a series of stops being hit below $2 which cause the price to spike way lower.
I have no idea if that will happen.
The record fund shorts currently will not be added to very much down here(I don't think). Those shorts have been accumulating for a very long time(over a year) at much higher prices because of the fundamentals were very bearish and prices still had significant downside.
Rigs searching for ng have been dropping almost every week the past year, so the market is starting to respond to these low prices(can't make a profit down here) so the fundamentals may be shifting.........which is what huge funds trade.
What incentive would they have to short more at $2 with fundamentals probably shifting?
So that part of the selling pressure that has been super imposed on the market for the past year+ should probably let up way down here.
Great points. I would think there would be a cut in production with these low prices. I am betting that we will get at least on cold outbreak in February that will cause the price to rise, hopefully causing shorts to start covering and maybe a small squeeze. That was my thinking when I put on the trade but the Euro was much colder then as well. My mistake was not selling the call when I put on the trade. Learn from your mistakes. All year I have sold that call when I went long and it worked. I was trying to be more aggressive. Might have to pay for that move.
Not sure when you went long but that was actually a great trade until the European model suddenly turned much milder a couple of days ago.
The correlation between great trades during the Winter in natural gas and the latest run of weather models is extremely close.
If the models don't change too much from the get go, you are good. If they flip to the opposite weather but flop back.......you have a drawdown/or drop in equity but then are good again.
If they flip to the opposite weather but don't flop back.........you are stuck with a drawdown and no good weather reason for the market to come back but left hoping and hanging on each model run to see if the flop back will happen.
Then, deciding at what point that you will throw in the towel...........with the biggest fear being that you will get out right when the market turns around(if you had just stayed in one more day, you would have survived the temporary drawdown).
I can't know what the best thing for you to do here is Grant.
One thing that I sometimes use in with a (losingt) position is to ask "If I was flat, would I be putting on this current position right here and right now?"
If the answer is no way, then I get out. If the answer is yes, then I stay in but sometimes, when you have skin in the game its harder to think objectively vs seeing reasons for why your position can come back(giving more weight to them than they deserve).
I honestly like my position right now even though it is a loser. I think there is potential for this to be a winner over the next 41 days. I should be able to get enough premium from calls to make up for most of the loss.
Give us some colder models and I'll join you!
Keep your powder dry boys! This decent won't last for too long.
Historicaly, we have only been below $2 in 2012 and 2016. If I recall (because I haven't bothered to go look it up), we had very mild winters, high production, and high storage. So nothing really too far out of the ordinary, given the current conditions. But be prepared. When things turn around, they will do so quite quickly. Mostly in anticipation of the coming heat of summer, and the demand for air conditioning.
The fact that rigs are going offline, is only another reason that the hedge shorts will soon be dropped. Best to keep an eye on this, as it will be a signal for the days to come. Little players like us, are not going to influence the market like the funds will. So, we play along with them, cautiously.
I took a loss and set up a new position. Still dropping. Wondering how low this will go. I really didn’t think it would push past $2. I sold calls around my new position.
Thanks for sharing Grant.
Can't win em all/make money every time.
Even the best traders have losing trades even though it stinks on those days. You are one of the best.
Friday weather: Still pretty mild: https://www.marketforum.com/forum/topic/45980/
NGI earlier: Natural Gas Futures Nearing $2 on ‘Quite Extreme’ Warm Shift in Forecasts
Saturday Weather. Still very mild on most guidance but half the Canadian ensembles have turned very cold.
It's a balance between predictive models, and the reality, as revealed in the thursday reports. Which are always a week behind. Balance created between a three week differential.