RE:RE:RE:RE:Crashed Natural gas analysts look at pipeline flows, weather, population, industrial distribution and operational maintenance.
The market is well aware of that and it's impact to EoS predictions. Anyone that is serious in the Natural gas market looks at the GFS and EC models which run every 4 hours and look out 30 days. Anything past 15 days is low confidence but still moves the market. Anything in the two week outlook is almost 100% priced in. What may not be priced in is if there are an unusually high number of freezeoffs or if production capacity is damaged.
NatGasWeather is a good service if you are more interested in the fundamentals of the gas market and how things are priced. They offer a morning and midday report. They also give you access to every single weather model run and it's impact to the TDD.
Here is a cut from today's midday report:
Midday Update Highlights
- March'23 nat gas futures opened lower after the weekend break after both the GFS and EC trended nearly 20 HDDs warmer for the 7-15-day forecast period. Prices have since recovered off lows of the day but still down nearly 10 cents.
- Also of consideration, while the weather data was bearish trending over the weekend, there were some bullish undercurrents showing up last week, highlighted by US production down 1-2 Bcf/day versus the prior week, the EIA weekly storage report missing bullish versus expectations, Freeport LNG taking small steps towards resuming operations, and nat gas use taking a greater share of the energy stack due to cheaper prices.
- The latest midday GFS data trended 5-6 HDDs colder for the front 7-days but trended 5 HDDs further warmer for Feb 6-12 and where these days are solidly to the bearish side as national demand drops to light levels.
- While the 7-15-day forecast is bearish, there's still strong to very strong demand the next 6-days as frigid conditions rule most of the interior US w/lows of -10s to 20s, including frosty lows of 10s to 30s into Texas. US production remained at 97-98 Bcf/day over the weekend but is expected to drop to near or under 95 Bcf/day the rest of the week as cold temperatures lead to wellhead freeze-offs.
- What's been at issue this entire winter is frigid patterns haven't been able to last more than 5-6 days before a much warmer pattern is close on its heels. On cue, this is exactly what's setting up for the coming 15-days as after a cold pattern this week, national demand plummets to light levels Feb 5-12 as subfreezing temperatures shift over the western US, while the eastern ½ of the US warms well above normal and into the comfortable upper 40s to 70s.
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The latest longer-range CFS model also favors light national demand Feb 5-14, but then forecasts a rather cold US pattern returning for the second half of February. A sustained cold pattern will be needed 2nd half of Feb into March if a weather driven rally is to be expected.
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To no surprise, nat gas prices opened lower after the weekend break as the weather data trended warmer for the 7-15-day period. But as we also mentioned, there were some bullish elements showing up last week that we thought could eventually lead to strength this week as the supply/demand balance shows signs of tightening, and this may have aided prices rallying off session lows. Of course, it would be helpful for the bullish case if Freeport LNG took another step forward towards restarting.
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Market expectations for this week’s EIA storage report are for a draw of -125-150 Bcf, lighter than the 5-year average of -181 Bcf to further increase surpluses to +165-170 Bcf.
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For today's trade, we were interested in if lows of the past 1.5 years set last week at $2.69 would hold after warmer weekend trends. Prices briefly dipped under it but have since rallied a few cents above it. Although, for bulls to gain some semblance of momentum, they would need to make a run for $3.
15-Day TDD Forecast: The GFS and EC forecast strong demand this week as frigid air sweeps across much of the interior US. However, a warmer trending pattern for Feb 5-13 led to lower prices at the Sunday reopen.
Days 1-6: A series of frosty weather systems will sweep across the northern and central US this week w/rain, snow, and chilly lows of -20s to 20s for strong to very strong demand, while aided by lows of 10s to 30s into Texas and the South. The far West will be comfortable w/highs of 40s to 60s, while nice over the Southeast w/highs of 60s to 80s. Cold temperatures will also drop US production by a few Bcf due to wellhead freeze-offs.
Feb 5-13: A milder pattern is still forecast in both the GFS and EC to arrive Feb 5-13 as frigid air retreats to near the Canadian border. The longer-range CFS data also favors a milder pattern Feb 5-13 but does favor a colder US pattern returning for the second half of February.