June, July Natural Gas Called Lower as Forecasters See Milder Long-Range Temps
8:53 AM
The expiring June natural gas contract was set to open Tuesday about 3.6 cents lower at around $2.903/MMBtu, with weather models continuing to show long-range cooler trends taking the edge off after a hot May, according to forecasters. The July contract was set to open about 3.8 cents lower at around $2.925.
As mentioned last night, we have a northwest flow situation and moderating temperatures on the week 2 models. Overnight that strengthened.
The front month, June NG expires today.
Often, we see a spike higher/lower as this is happening.
The last GFS wants to bring the dome into the eastern half of the country, in contrast to most previous guidance that cools it down.
Look for the extended NWS products to be cooler in the east this afternoon...bearish ng.
gfs_namer_360_200_wnd_ht | gfs_namer_360_500_vort_ht |
gfs_namer_360_1000_500_thick | gfs_namer_360_850_temp_ht |
Thanks, Mike.
As Mike knows, the GFS out past 10 days is very unreliable. It is easy to see this based on it sometimes jumping around wildly from one run to the very next one during the day 11-16 period. As much as wx models' accuracy has advanced over the last 20 years, individual operational model runs of the GFS during the late week #2 period are still not good in general. Whereas they have some value up through early week 2, the ensemble means are more useful in late week 2 and to some extent they can be more useful even in early week 2. Week #1 is more in the operational models' wheelhouse with the Euro being a little better than the GFS. The Canadian lags them both. I assume Mike largely agrees with all of this. I'm really mainly addressing these comments to other readers.
From Dow Jones:
"Natural gas for June delivery dropped 6.40 cents, or 2.2%, to $2.8750 a million British thermal units on the New York Mercantile Exchange--its worst day since April 19. Prices had risen in three straight weeks entering Tuesday on expectations for hot weather, but analysts said forecasts for colder-than-expected temperatures were also cooling the price rally"
Though not mentioned in the news story I posted an excerpt from, I believe that Alberto going onshore with virtually no Gulf NG supply disruptions combined with it bringing the expected cooling clouds/rains and with no other tropical threat in sight is a factor. Back on Friday, there was a chance for this to get a lot closer to or even within the eastern side of the main production area, which would have resulted in at least several bcf of shutins..so less bearish than it is with essentially no shutins. So, even if it were considered an overall bearish factor on Fri, it is more bearish today. The cooling from clouds/rain was already anticipated but there being virtually no shutins wasn't.