Thanks for getting us started again  Larry. Sorry I'm a bit late. We were at the local festival of lights with the grand kids. 

Wow, it was interesting to see the bid/offers crashing lower during the last minute before the open. Going form moderately lower to MUCH, MUCH lower. If one was trying to sell that with more than a minute to go at a predetermined price, you missed it unless you were nimble and changed the order lower and it was a VERY BAD idea to sell this open in the midst of the massive surge of panic selling all at once. 

The extreme over reaction on the open is not unusual for natural gas in recent times.

In many markets(ng in the past) the high of a gap lower like that is in the opening range, then we continue lower. However, this appears to be big panic type selling by longs who want out at the market no matter the price. 

However this is quickly exhausted, with no new selling at lower prices, only buyers.........so we have to go higher to attract new selling.

Being $1,000/contract lower is very bearish but we are $250/contract higher than the open, which was overdone at the time.

The massive gap lower, that opened at 2.210 was well below the previous contract low of 2.270 and Fridays low of 2.328.

Is this a downside break away gap? If it stays mild the rest of the month after this weeks cold shot, its hard to imagine us filling the gap, especially with the bearish fundamentals/supplies.

Maybe we can test $2 if its warm enough?

However, the strong negative seasonal is ending and prices are really low down here and we may have dialed in much of the warmth coming up already. 

Hard to believe that NGF spiked to 2.980 on November 5th(from early heating season record cold), just over a month ago and we traded all the way down to 2.158 on the 1 minute opening bar this evening.......... $8,022/contract lower, WOW!

Natural Gas Intelligence Monday Morning:

Natural Gas Futures Down Sharply on ‘Big Move Warmer’ in Weather Models

       8:57 AM

Previous thread on Natural Gas:

https://www.marketforum.com/forum/topic/44039/

Mondays weather: https://www.marketforum.com/forum/topic/44052/

Last week EIA report:

Weekly Natural Gas Storage Report

 for week ending November 29, 2019   |  Released: December 5, 2019 at 10:30 a.m.   |                                                                                                                                                                                         -19 BCF slightly bullish                           

Summary

Working gas in storage was 3,591 Bcf as of Friday, November 29, 2019, according to EIA estimates. This represents  a net decrease of 19 Bcf from the previous week. Stocks were 591 Bcf higher than last year at this time and 9 Bcf below the five-year average of 3,600 Bcf. At 3,591 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.

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

Latest Release   Dec 05, 2019   Actual-19B    Forecast-22B    Previous-28B

7 day temperatures for that report:

Very mild(except the Northeast) 7 day temperatures ending last Friday for this Thursdays EIA report:

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.

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.

Natural Gas Intelligence after the close:

Weekend Forecasts a Letdown for Bulls as Natural Gas Futures Tumble

     5:05 PM    

Natural gas futures gapped lower Monday after weekend forecasts erased December cold from the outlook, further pressuring a market needing robust winter demand to bring it closer to balance. After opening more than a dime below Friday’s settle price, the January Nymex contract went on to settle at $2.232/MMBtu, down 10.2 cents. The February contract settled at $2.234, off 8.5 cents.

metmike:

Mid afternoon made new highs after the European model(ensembles especially) came out much colder. 

Natural Gas after the close on Tuesday:

Natural Gas Futures See Small Bounce as Models Add Back Demand

     6:17 PM    

In the wake of a major sell-off to start the week, natural gas futures gained back some of those losses Tuesday as the latest weather data returned demand to the outlook. The January Nymex contract added 3.2 cents to settle at $2.264/MMBtu, while February settled at $2.263, up 2.9 cents.

metmike: Most of the models have been turning colder. We filled the weekly gap lower from last weeks low to this weeks high. This gap and crap chart formation is usually the sign of a selling exhaustion, especially when it comes after a pretty long drop in prices. 

Only the latest weather models will tell us if that's what it was. At 2.270 right now, we are right at last weeks low. This appears to be a key area.

On Sunday Night, when we had the massive gap lower, it was NOT followed by any follow thru selling. Those were the lows and we closed Monday quite a bit higher than that, although still sharply lower than Fridays settlement.

That was a subtle signal of price strength.  See more on that discussion above. 

Regardless of this, if the models all turn much milder(the later part of the forecast looks pretty mild), none of the this discussion or the previous chart patterns will matter and we will go lower.

Wednesday Morning from NGI:

More ‘Model Instability’ as January Natural Gas Called Higher

 Most of the models were a bit colder at 12Z vs 0Z. The GFS was the exception and it isn't reliable/is very jumpy. The more important GFS and Euro ensembles were colder than 0Z (and 6Z for the GEFS). However, the EPS remains much milder than the GEFS. Also, the market appears to be keeping in mind high supply/production as a prime player. So, wx isn't a primary driver at times, including today.

 Edit at 10AM Thursday: Consistent with the idea that the GFS is unreliable/jumpy, note that the subsequent 3 GFS runs (going through 6Z today) have been much colder (2-3 F/day colder) than what had been a much warmer 12Z GFS that lead to a selloff. Much of today’s rally can imo be tied to a 10 HDD colder 0Z EPS vs its prior run due to a much stronger +PNA being modeled by it during 12/15-20.

 Now we await the weekly EIA.

-73 BCF  A bit bearish

Weekly Natural Gas Storage Report

 for week ending December 6, 2019   |  Released: December 12, 2019 at 10:30 a.m.   |  Next Release: December 19, 2019 

Summary

Working gas in storage was 3,518 Bcf as of Friday, December 6, 2019, according to EIA estimates. This represents  a net decrease of 73 Bcf from the previous week. Stocks were 593 Bcf higher than last year at this time and 14 Bcf below the five-year average of 3,532 Bcf. At 3,518 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   Dec 12, 2019   Actual-73B    Forecast-76B   Previous-19B

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

Show more

NGI after the close Thursday:

Weather Models Turn Chillier, Send Nymex Natural Gas Rocketing; Cash Slips

     5:32 PM    

With back-to-back gains in projected demand showing up in the latest European weather models, natural gas bulls were back on the offensive Thursday. The January...

Friday Morning:  

Weather Model Uncertainty ‘Sky High’ as Natural Gas Futures Reverse Lower Early

     8:58 AM    

Countering a chillier outlook in Thursday’s forecasts, warmer overnight guidance had natural gas futures trading several cents lower early Friday. The January Nymex contract was off 5.8 cents to $2.270/MMBtu shortly after 8:30 a.m

Weather Friday:

https://www.marketforum.com/forum/topic/44226/

I know that selling options isn't always recommended, but historically NG prices are pretty cheap right now and it would seem exposure is somewhat limited.  Anyone thinking of selling $2 Jan or Feb puts?  

 Considering how much warmer were the overnight models and that the 12Z models were overall neutral/mixed,  I'd say NG held up quite well. And if one were to use the Thursday Euro weeklies as a reason for it holding up well, I'd say that's not the case as January is overall warmer. Something else (quite possibly non-wx) was keeping NG from dropping sharply.

AO plunging lower compared to earlier this week when it was positive. Favorable for cold air masses to be flushed from high to mid latitudes........more than models show usually. 

Wide spread in the AO solutions though. 

Seasonals turn up here and we also did a gap and crap, selling exhaustion formation on the daily and weekly charts after a big move down after Sunday Nights huge gap lower was filled.

We are still closing lower for the week but near the top of the range.

Bu it could look much different Sunday.

Mike,

 Speaking of crap, the wx models for week 2 and in some cases even in late week 1 have been awful with big jumps all over the place. Why is this happening? Week 2 has been largely unforecastable:

 From Maxar this morning:

"Skill has been low when forecasting past a week of lead time, as models struggle to handle a level of variability observed since the second half of November. As an example of the low skill, modeled 850mb temperatures in the 11-15 Day period averaged an anomaly correlation to observation of –0.06 in the past week over North America. The Euro EN itself averaged a correlation of near zero."

 So, even the best model, the Euro ens has been no better than just going with climo during the 11-15! So, in a sense, looking at models past day 10 isn't even giving us a clue as to the what the wx will actually be!

I agree with that Larry.

We are are having some strongly competing forces in the atmosphere.

I was very surprised at the widespread warmth in the week 3-4 outlook yesterday with the AO going solidly negative at the end of 2 weeks.

Of course the AO prediction is coming from the same models that are doing badly right now, so the AO prediction is crap too. However, it's been negative enough for the last several days at 2 weeks, where it presents an elevated threat for some major cold to make it into the US in week 3. 

Not a forecast, just an increased chance of it happening with an atmospheric set up that features a -AO, which enhances the flow of cold from high latitudes to the middle latitudes.

 Whereas the crazy ups and downs of models can be quite frustrating from a forecasting perspective, they also make NG and other markets more volatile at times when the markets are giving them their attention and thus increase opportunities as well as risks during these times. With the 11-15 day portion of models lately being so bad, I have to wonder if the markets are going to pay less attention to them for awhile and only concentrate on days 1-10. With the operational GFS, I think that's already been the case for quite awhile.