Thanks again for getting us started with natural gas this week. We missed you last week.

I have the Euro ensembles -3.65  and the GFS ensembles +.19.

Also, late Friday, I had the 12z Euro ensembles +2.72 vs the the 0z run, which gave us the bounce after the close. 

Also noteworthy is how cool the Euro is vs average in week 2. The total CDD's for 2 weeks of 95.76 is over 9 below average but the 2nd week of the forecast is even more then 10 CDD's below average.

For the GFS Ens, it gets pretty cool after June 10th also but not as cool as the Euro.

Mike,

 Good points, they are rather cool. However, don't forget that both ensemble means have been cold biased for many months now, especially in the E US. The CDN ensemble mean has been even colder. So all 3 ens means have been averaging too cold. OTOH, the much less reliable GFS operational has had virtually no cold bias and maybe even a slight warm bias averaged out..I'm not sure. The Euro op was actually too hot on a number of runs in the SE US during the historic big late May heatwave. OTOH, the GFS was very accurate!

 So, we have too cold ensemble means but the GFS/Euro operationals, which have less of or no cold bias, are far less reliable though they can sometimes provide good hints as to changes. I think the best thing to do is to give heaviest weights to the ensemble means but adjust their temperatures warmer, especially in the E US. For week 1, I give the operationals some weight but not much for week 2, especially the late week 2 GFS.

I noticed the last 18z GFS was much warmer. When that came out, ng bounced exactly in tune.

Residential cooling demand via electricity generated by burning natural gas, is increasing now seasonally and will be the most important  market trading item with potential for big changes because of changes in the weather forecast(cooling degree days)

Sunday weather:  No extreme heat. Huge rain system this week. How far north will the rains go?

https://www.marketforum.com/forum/topic/31486/

Monday Weather:  No extreme heat. Huge rain system this week. How far north will the rains go?

https://www.marketforum.com/forum/topic/31565/

Tuesday Weather: No extreme heat......yet. Huge rain system continues to track farther south than earlier forecasts.

https://www.marketforum.com/forum/topic/31629/

Wednesday Weather:  No extreme heat. Huge rains system still tracking south.........wet for driest places, less rain for wettest places.

https://www.marketforum.com/forum/topic/31705/

Thursday Weather: No extreme heat. Huge rains still tracking to driest places and missing the wettest places.

https://www.marketforum.com/forum/topic/31797/

Friday Weather:    No extreme heat. Huge rains still tracking to driest places and missing the wettest places. Same bearish forecast for the 4th day in a row.

https://www.marketforum.com/forum/topic/31907/

Saturday Weather: Even a bit cooler. Rains hitting drought areas this weekend, planting continues to catch up. Benign forecast, possible heavy rains returning early week 2.

https://www.marketforum.com/forum/topic/32003/

Sunday Weather: Not as cool late week 2. Big rains returning late week 1.

    https://www.marketforum.com/forum/topic/32068/             

Monday Weather: Warming starting later this week and continuing into week 2. Rains return at the end of this week.

https://www.marketforum.com/forum/topic/32142/

Previous weekly discussions on natural gas here(dang, this is getting to be long list)

https://www.marketforum.com/forum/topic/31099/

https://www.marketforum.com/forum/topic/30641/

https://www.marketforum.com/forum/topic/30007/

https://www.marketforum.com/forum/topic/29419/

https://www.marketforum.com/forum/topic/28858/

https://www.marketforum.com/forum/topic/28351/

https://www.marketforum.com/forum/topic/27780/

https://www.marketforum.com/forum/topic/27305/

https://www.marketforum.com/forum/topic/26861/

https://www.marketforum.com/forum/topic/26506/

https://www.marketforum.com/forum/topic/26105/

https://www.marketforum.com/forum/topic/25678/

https://www.marketforum.com/forum/topic/25189/

https://www.marketforum.com/forum/topic/24662/

https://www.marketforum.com/forum/topic/24111/

https://www.marketforum.com/forum/topic/23680/

Look for the big injections to continue..........depending on the weather.  We've quickly gone from a deficit vs 2018 to a surplus(first time in a long while). Next up, a surplus vs the 5 year average which will happen  later this year, possibly late Summer if its cool this year.

Summary

Working gas in storage was 1,753 Bcf as of Friday, May 17, 2019, according to EIA estimates. This represents  a net increase of 100 Bcf from the previous week. Stocks were 137 Bcf higher than last year at this time and 274 Bcf below the five-year average of 2,027 Bcf. At 1,753 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. 

Last week: +114 BCF-bearish suprise

https://www.investing.com/economic-calendar/natural-gas-storage-386

Weekly Natural Gas Storage Report

 for week ending May 24, 2019   |  Released: May 30, 2019 at 10:30 a.m.   |  Next Release: June 6, 2019 

Here are the temperatures from the 7 days, ending the previous  Friday that were used for the last EIA report.

Temperatures for the next report, this Thursday.  HOT in the Southeast, lots of CDD's there.

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.

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 getting close to a time frame when ng seasonals become very negative, from around mid June thru August.

A cool Summer, with currently bearish fundamentals/huge supplies could cause even lower lows.

May Natural Gas expires on May 29th, Wednesday. 

Record late season withdrawals last April......2018 have only made the big injections that much more bearish on the year to year comparisions. So we have experienced something that's extraordinarily rare in the month of April-new lows(maybe has happened only once during the last 2 decades).

We also erased the long lived storage deficit vs the previous year and turned it into a surplus(but still well below the 5 year average)

Looking at the chart below, you can see the nice bounce during May from expectations of the intense heat in the Southeast, causing some record cooling demand for May in that region.  The bounce from that heat was completely dialed in as we spiked higher on Monday May 20th.  

Less heat coming up and a very bearish EIA number last Thursday has pushed us to new contract lows. The market will be reacting to changes in the cooling degree day forecasts this week, thru the rest of the Summer. As long as there is no extreme heat in the forecast, natural gas can continue lower. 

NG 7 days

Natural gas 3 months below

The Next LNG Boom Will Dwarf The Last One

https://oilprice.com/Energy/Natural-Gas/The-Next-LNG-Boom-Will-Dwarf-The-Last-One.html

This year could be the biggest year yet in terms of LNG volumes of projects given the go-ahead, analysts say.  

This year is likely to set a record for volume of new project approvals, Michael Stoppard, Vice President and Chief Strategist for Global Gas at IHS Markit, wrote in March this year.

“The projects first out of the gates seem likely to serve as a “firing pistol” to initiate a new phase of development,” he said, noting that IHS Markit sees LNG demand rising from 320 million tons (mt) in 2018 to 465 mt by the mid-2020s, and exceeding 630 mt by the mid-2030s.

From Natural Gas Intelligence Monday Morning:

With forecasts over the weekend pointing to mild conditions stretching into the middle part of June, natural gas futures continued to grind lower early Monday. At around 8:30 a.m. ET, the Nymex July contract was off 1.6 cents to $2.438/MMBtu.

Over the weekend, weather models took on a “decisively cooler look overall for the middle third of June,” according to Bespoke Weather Services. The firm pointed to American and European guidance showing a “deeper trough” into the eastern half of the Lower 48 and a “warm upper level ridge” in the western United States.

“This is very typical of what one would expect in an El Nino pattern, and while we still are not able to say with certainty that El Nino is here to stay, it is definitely still showing itself in the projected pattern for now,” Bespoke said. “There is still a little warmth here in the current week,” enough to push national cooling degree day totals slightly above normal “before heading into the solidly cooler pattern as we move into next week.

“Week 3 carries lower confidence, but from what we can see of the start of that week, the pattern still does not look promising for bringing any notable heat back into the eastern half of the country.”

The latest six- to 10-day forecast from Radiant Solutions Monday showed near normal conditions for the eastern Lower 48.

The pattern features a “nearer term tropical disturbance in the western Gulf of Mexico, which will interact with an upper low for a period of unsettled conditions in the South,” Radiant said. “This limits the risk for more significant warmth in the region and to its north, where easterly flow into the Mid-Atlantic can be expected through at least mid-period.”

As for the 11-15 day period, the forecaster’s updated outlook trended cooler in the central part of the Lower 48 compared to Friday’s expectations.

The upcoming pattern “includes a coverage of below normal temperatures in the Midwest and above normal readings along the West Coast,” Radiant said. “The forecast remains on the warmer side of the models, which may be cool biased in the wake of high soil moisture spanning a large part of the U.S.”

Prices took a beating late last week, with the front month on Friday dropping to some of the lowest levels seen since June 2016. Natural gas is likely to remain under downward pressure this week, according to EBW Analytics Group CEO Andy Weissman.

The main catalysts for last week’s sell-off were forecasts advertising widespread mild weather well into June and a large bearish miss in the latest Energy Information Administration (EIA) storage report, he said.

“Our model indicates that this reaction was fully justified,” Weissman said. “Absent sustained very hot weather over much of the country, we expect the storage deficit versus the five-year average to continue to shrink all month long and the surplus versus last year to continue to build.

“After last week’s steep losses it would not be surprising if gas prices rebound modestly early in the week. This week’s reported injection, however, could once again surprise the market, potentially driving prices to new lows by the end of the week.” 

                By metmike - June 3, 2019, 11:42 a.m.            

12Z GFS MUCH warmer and more CDD's with heat ridge in the East....might be an outlier.

12Z GEFS said it is an outlier. NG back down on that from what I can tell.

Absolutely agree Larry!

Here's what that outlier,12z operational  GFS looked like:

Actually, it's very similar to the Summer of 1993!  Again, an outlier at this point. The Canadian ensembles moved slightly in that direction and with an upper level trough along the West Coast, there is the potential for amplification similar to this last GFS operational model("potential" is often the reason for outlier solutions, when they over amplify a feature)

The outlier late week 2 pattern features a huge heat ridge in the East and jet stream configuration very similar to 1993.  

The 12z operational European model came out with the complete opposite (outlier) solution. Huge upper level ridge in the West to the N.Plains and a very cool trough to the east.

                  Natural Gas Intelligence after the close:

Natural Gas Futures Battered Again as Weather Outlooks Cool; Spot Gas Slips

     5:53 PM    

The slaying that natural gas prices received last week worsened Monday as the front end of the futures strip shed another a nickel or so, extending the July Nymex contract’s losing streak to three days and a total of around 22 cents. Spot gas prices also remained mostly weak despite heat and humidity blanketing much of the southern United States. With comfortable temperatures in the northern part of the country and stormy conditions out West, the NGI Spot Gas National Avg. climbed just one cent to $1.87/MMBtu.

Wow, look how low the cash/spot  price is!

From Natural Gas Intelligence Tuesday morning:

‘Massive’ Drop in Daily Production Data Supports Natural Gas Futures Early

NGI closing comments:

Natural Gas Futures Hit Pause Button on Recent Slide Despite Ongoing Bearish Sentiment

     5:29 PM    

Weather models continued to show cooler trends for the latter part of June, but after plunging more than 20 cents over the past three trading sessions, a technical bounce kept natural gas futures prices in the black on Tuesday. Spot gas prices continued to decline in several areas as stormy conditions were expected to move across the country through Wednesday. However, eastern markets strengthened a bit due to a loss of supply in the region. The NGI National Spot Gas National Avg.rose 6.5 cents to $1.935.

NGI Wednesday morning:

Forecasts ‘Much Cooler’ Overnight; Natural Gas Futures Steady Early

Model CDD totals today 0Z vs yest 0Z runs;

EPS +2

GEFS -13

From Natural Gas Intelligence:

Back-to-Back Bearish Storage Surprises Open Floor for Natural Gas Futures          

Jun      06    2019        

      One week after delivering a massively bearish storage injection, the Energy Information Administration reported another.

+119 BCF extremely bearish

From Natural Gas Intelligence after the close Thursday:

Natural Gas Futures Fall to Fresh Low After EIA Stuns with Another Whopper Storage Build

     5:30 PM    

Hefty natural gas supplies were on full display Thursday after the Energy Information Administration (EIA) reported another massive storage injection.

       https://www.investing.com/economic-calendar/natural-gas-storage-386                                                                                                                                                                                                                                                                                                           Latest Release  Jun 06, 2019   Actual119B   Forecast111B   Previous114B                                                                                                                                                                                                                                                                                                                                                                                                              

Friday morning from NGI: Natural Gas Futures Seen Nearing Bottom as Market Digests Another Big Bearish EIA Miss

 I saw that the CDDs on the 0Z GEFS and EPS per pretty much flat vs 24 hours ago.

I think that they will start climbing shortly  with the progression of days as we discard a cool day near term and add another warmer day at the end of the forecast.

By warmer at the end, it looks more like average on the GFS Ens and not as cool on the Euro Ens.

It's tough to build a heat ridge in the Summer over wet soils and we would want to see a heat ridge somewhere in the high population areas to inspire natural gas to have some sort of short covering bounce based on a big increase in CDD's. Ideally this would include the entire East Coast and the South, if we can't get the Midwest to joing the heat party. 

My speculation is that, at the moment, based on the models,  the best chance for a heat ridge is in the south around TX, possibly developing or  extending farther east just based on the long lived ridge in that location this past May. 

An interesting and much discussed here item the last 3 months is this contra seasonal plunge lower at a time of year when prices are usually strong(Spring) making new lows by a very wide margin with record smashing, mind boggling big injections. 

Cash prices have been MUCH lower than futures during this time(below $2 much of the time) and a pretty good advertiser of this fundamental with supplies gushing in. 

So now, we enter what is seasonally/historically a very weak period for natural gas prices the next 2 months. 

Considering these stratospheric injections recently, it seems inconceivable that we could ever get back close to $3 thru the rest of the year, even with the hottest Summer ever. 

I will wild guess that 2.7 is attainable with a couple weeks of intense heat in the high population centers.

The Euro Ens was warmer (more bullish) by around 4 CDD's but only because the pattern is warming back up to average temps in week 2.

I could see this causing us to bounce here and end strong IF we had bullish fundamentals and low supplies...........and didn't have a week long stretch of cool temps before the heat increases in week 2. Since we don't have  the right factors outside of weather to get overly bullish, a LESS BEARISH Euro Ensemble(which the market puts alot of stock in) may not be enough. 

I wouldn't want to be long on the Sunday Night open if the cool stretch coming up has been expanded out another few days.  We have plunged quite a bit but can go even lower if it stays cool. 

However, if the warming/heating trend continues at the end of the period with more gusto,  this might be a good place to buy early next week. 

Also, the week 3-4 outlook this afternoon, a low skill period but still one that traders will be trying to get a better handle on next week, looks extremely bearish, so an increase in CDD's on one key model before the close on Friday with everything else incredibly bearish is not having a great impact..................though we did test yesterdays low and are finishing higher for the day.

Based on that, we have a potential double bottom if the warming/heating at the end of the period continues early next week..

Based on that, this is a buying set up(for me) but only on a pattern change to widespread heat in the high population centers. 

Temperature Probability

Natural Gas Intelligence after the close:

Natural Gas Futures Bounce Slightly as Demand Added to Weather Forecasts; Cash Slips

     5:46 PM    

Trading action quieted down Friday for natural gas futures as market participants opted to take a breather ahead of the weekend. With a small bit of demand added back into long-term weather forecasts, the July Nymex contract rose 1.3 cents to settle at $2.337/MMBtu. August rose less than a penny to $2.331. Spot gas prices softened amid light weekend demand, with the NGI Spot Gas National Avg. tumbling 9.5 cents to $1.905.

wx updated sun

CDD comparisons for today's 12Z run vs Fri's 12Z run:

EPS -5

GEFS -6

Thanks Larry!

NG is as flat as a pancake tonight (-:

Monday morning comment from NGI:

Natural Gas Bulls Look to Recover as July Nymex Posts Small Early Gain