Natural Gas Friday
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Started by metmike - Nov. 2, 2018, 11:17 a.m.

For the weather that affects residential heating demand and natural gas prices, go here:

By metmike - Nov. 2, 2018, 11:19 a.m.
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By metmike - Nov. 2, 2018, 11:20 a.m.
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From Natural Gas Intelligence this morning:

East Seen Milder in Mid-November; December Natural Gas Called Lower

By metmike - Nov. 2, 2018, 12:56 p.m.
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                        Re: Re: Re: Re: Weather Friday            


                By metmike - Nov. 2, 2018, 12:55 p.m.            


The 12z operational GFS is amazingly colder than the previous runs on HDD's for one reason.

In the previous runs, the southern stream was not interacting with the cold northern stream. 

On the older solutions, a strong piece of energy in the southern stream had been scheduled to hit the Southern Plains to S.Great Lakes in week 2 AFTER the cold northern streams Arctic air had receded back into Canada.

On the new solution, that Arctic chill stays in place a couple of extra days, so that when the southern stream energy arrives, it taps into it.......with temps cold enough for snow on the northwest side of the track and the circulation on the backside of the storm has loads of cold that plunges deeply south.

Maps below. 

  1.    Notice on the first 4 from the old solution, the blue cold in the bottom righthand corner has receded back into Canada.

2. Same maps on the next run, notice the blue cold sub freezing temperatures at 850 mb........a mile above the surface(bottom right hand corner) getting pulled into the developing storm and getting wrapped deeply south!!!







By Jim_M - Nov. 2, 2018, 1:22 p.m.
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Could make for a nice afternoon rally for NG

By WxFollower - Nov. 2, 2018, 2:53 p.m.
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NG rose even a good bit more more due imo to the colder more reliable 12Z GFS ensemble backing the colder less reliable 12Z GFS.

Edit: Since the colder 12Z GFS ens came out, the 12Z Euro confirmed the colder trend and allowed NG to remain not far from session highs.

By metmike - Nov. 2, 2018, 7:28 p.m.
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Agree Larry!

Closing comments from Natural Gas Intelligence:

Colder November Outlook Prompts Natural Gas Futures Rally Ahead of Weekend

     6:15 PM    

Natural gas futures rebounded Friday on colder trends for the second week of November, with more volatility from weather models for a market keenly focused on shifts in the temperature outlook. The December Nymex contract added 4.7 cents to settle at $3.284/MMBtu after trading in a fairly wide range from $3.166 to $3.313. January added 3.5 cents to $3.310, while February climbed 1.9 cents to $3.192. Read More

By WxFollower - Nov. 4, 2018, 2:19 p.m.
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 This evening's NG open will be interesting. The Sunday midday Radiant (and I assume most other) forecasts are sharply colder vs the Fri AM forecast for weeks 1-2. However, some of this was baked in on Friday afternoon when the colder 12Z model consensus came out. Also, fwiw, the latest week 3-4 CSFv2 is warmth dominated. Because I don't think the CFS weeks 3-4 are nearly as market moving as weeks 1-2 due to its unreliability (I mean look at how much weeks 1-2 just changed) and I don't think this degree of colder weeks 1-2 was baked in on Friday afternoon, I expect a strong opening of, say , up 5 cents+.

By metmike - Nov. 4, 2018, 3:26 p.m.
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Agree Larry,

Also the week 3-4 forecasts have been warm almost every day for a couple of weeks it seems. This is not new news at all, which is what the market trades.

On Friday around 7am, the market was sharply lower and closer to the lows of the week, then surged up, with all the late morning/early afternoon guidance coming in MUCH colder, adding to the gains. In some cases, one of the biggest changes for one model run that I remember in awhile. 

The  biggest change to me,  is probably the penetration south of the coldest air. 

There are a great deal of people living in the Midwest and Northeast but when you add the East Coast and then go all the way to the Gulf Coast(which is MUCH,MUCH colder to me), you can massively add to the HDD's. 

Adding one more thing. We will probably gap higher on the open. However, if there really is going to be the big warm up as advertised by some models late in week 2, that continues for the 2nd half of November, this spike up is a golden opportunity to get short.

Storage is low...........that's why we can spike up so strongly and quickly and as long as it stays cold, we can keep going higher but supplies hitting the market are apparently as a record right now.

If it gets mild later this month, the deficits with last year eroding is what the market will trade as well as the dropping risk of precariously low storage at the end of the heating season.

Repeating the frigid Winter of 5 years ago, gets storage down there and price spikes at levels not seen in over a decade. 

Repeating the mild Winters of 2/3 years ago and storage catches all the way up with last year and prices get buried into the 2's.

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:

By metmike - Nov. 4, 2018, 6:27 p.m.
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We got the gap higher.............HUGE gap higher in natural gas.  This looked like panic type buying(short covering). 

Impossible to know now whether to cover longs right here  or how far to risk on current longs or when/where to go short if the pattern turns warm in the 2nd half of November.

This is a massive break away gap higher. If the end of week 2 maps keep turning colder, instead of getting warmer as they have been advertising, who knows how high ng might go.

If the warmth gets closer and closer, this is the place to short and we will fill the gap this week and put in a massive/powerful gap and crap negative technical signal. 

The added cold in the weeks 1 and 2 part of the forecast right now indicate  our first withdrawals of the season.

Update to the update on the first statement:

I think the first withdrawal of the season will be the report after next Thursdays report(22nd), that includes the period going thru Friday(16th). Likely double digit withdrawal!!

The week after that, though its supposed to warm up, will probably also feature a withdrawal. 

This coming Thursday(8th) will feature an injection, then the next Thursday(15th) am not sure but might be a small withdrawal.  Have not done calculations.

What do you think Larry?

By metmike - Nov. 4, 2018, 6:47 p.m.
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We are back down to the lows that occurred during  the first minute of the open, as the initial panic buying subsided. 

Update: GFS ensembles really looking milder for week 2 and possibly beyond.......much more zonal vs a potential ridge west and cold trough east.

By WxFollower - Nov. 4, 2018, 11:57 p.m.
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Hey Mike,

 I just looked. Wow, what a gap up (nearly 23 cents and it is still up 16 cents!! 

 I haven't done any calculations. About all I can say is that the upcoming EIA this week will be based on 9 fewer HDDs. The last two injections are really showing the increased production. So, after a big rise like this, I can understand the idea of a selloff at the first definitive sign of an end to the widespread chill.

 Mike,  did you notice that the truewx GFS/Euro/EPS HDD/CDD are no longer free? I had a feeling that this was the plan all along. So, you're now using some of Reliant's products?

By metmike - Nov. 5, 2018, 4:24 a.m.
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Yes Larry. 

Thanks for tipping me off. Am on a trial.