NG weeks of 2/2/20 and 2/9/20
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Started by WxFollower - Feb. 2, 2020, 5:48 p.m.

Comparisons of 12Z Sun vs 12Z Fri in HDDs:

GFS ens: -4

Euro ens: +4

 Overall, pretty neutral.

Comments
By metmike - Feb. 2, 2020, 5:59 p.m.
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Thanks Larry,

I'll say higher open.

 Tied up at the moment. More comments later.

By metmike - Feb. 3, 2020, 12:31 a.m.
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We got the higher open and little spike higher, which was the high-1.871 NGH  from late week 2 maps looking much colder than they did on Friday.


But here we go again with the GFS products warming it up during that late week 2 pattern (last 2 GFS ensembles 18z-oz)instead of confirming or building on a pattern change to colder then. 


The last EE back at 12z this morning was actually colder. If it takes that back, we will probably make new lows but if it adds cold, we can make new highs.

By metmike - Feb. 3, 2020, 10:37 a.m.
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Natural Gas Intelligence:

Weather Picture Mostly Unchanged; Natural Gas Futures Called Higher

     8:48 AM    

Finding support in the prospect of a return to more seasonal temperatures by mid-February, natural gas futures were trading a few pennies higher early Monday. The March Nymex contract was up 3.2 cents to $1.873/MMBtu as of 8:30 a.m.


metmike: We were higher on Sunday Evening because of colder late week 2 forecasts vs Friday, some were looking pretty impressive.  Models ALL warmed up overnight. This is why we are lower. The models have been faking up out with the late week cold all year.............then going back to the mild weather continuing. 

Maybe we will turn colder in mid February but cold at the end of solutions has to be viewed with some skepticism. 

By metmike - Feb. 3, 2020, 10:58 a.m.
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The contract low for ngh are 1.812 from last week. We are within striking distance right now at 1.820.

There should be a lot of sell stops below 1.812 one would guess, so trading below there could result in a big spike lower that might or might not have any follow thru.

In the absence in that............if, lets say that we get down below contract lows but are met with huge buying orders from entities that see great value(or limited downside potential) that keeps us from dropping any more......it MIGHT be a sign that we are very close to a bottom.

However, if it remains warm in February, I would not be surprised to see even lower prices.

Regardless, we are putting in a major low for 2020 here(whether HERE is this week or later this month, I have no idea) but would bet with confidence that the price will be higher than this in April/May. .......and likely the rest of the year. 


By metmike - Feb. 3, 2020, 6:33 p.m.
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Natural Gas Intelligence after the close on Monday:


                  

Mild Weather Keeps Firm Grip on Natural Gas Futures; West Cash Strengthens

     5:18 PM    

After some early strengthening, natural gas futures fizzled out by midday Monday as weather models struggled to maintain any sustained cold weather. The March Nymex contract touched an intraday high of $1.880/MMBtu before going on to settle at $1.819, down 2.2 cents day/day. April slipped 2.4 cents to $1.862

By metmike - Feb. 3, 2020, 7:33 p.m.
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Weekly Natural Gas Storage Report

 for week ending January 24, 2020   |  Released: January 30, 2020 at 10:30 a.m.   |  Next Release: February 6, 2020 

                                                                                                                                  -201 BCF.

Wow, that's pretty big but the market expected it.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Working gas in underground storage, Lower 48 states Summary textCSVJSN
  Historical Comparisons
Stocks
billion cubic feet (Bcf)
 Year ago
(01/24/19)
5-year average
(2015-19) 
Region01/24/2001/17/20net changeimplied flow  Bcf% change Bcf% change
East638  696  -58  -58   533  19.7  583  9.4  
Midwest761  815  -54  -54   616  23.5  687  10.8  
Mountain143  151  -8  -8   115  24.3  144  -0.7  
Pacific210  220  -10  -10   179  17.3  235  -10.6  
South Central995  1,065  -70  -70   778  27.9  904  10.1  
   Salt297  328  -31  -31   280  6.1  270  10.0  
   Nonsalt698  737  -39  -39   498  40.2  634  10.1  
Total2,746  2,947  -201  -201   2,222  23.6  2,553  7.6  

Totals may not equal sum of components because of independent rounding.

Summary

Working gas in storage was 2,746 Bcf as of Friday, January 24, 2020, according to EIA estimates. This represents  a net decrease of 201 Bcf from the previous week. Stocks were 524 Bcf higher than last year at this time and 193 Bcf above the five-year average of 2,553 Bcf. At 2,746 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. 

 Working Gas in Underground Storage Compared with Five-Year Range 

Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.

 

By metmike - Feb. 3, 2020, 7:35 p.m.
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7 day Temps ending the Friday before last were used fo last Thursdays report. Not as mild, so a decent triple digit drawdown  closer to the 5 year average was expected.

Storage is in great shape for this time of year..........no matter how much cold we see during the last part of Winter.


https://www.cpc.ncep.noaa.gov/products/tanal/7day/mean/20200124.7day.mean.F.gif

                                    


By metmike - Feb. 3, 2020, 7:46 p.m.
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7 day Temperatures for this Thursdays EIA report.

Warm almost everywhere, near record warmth far Northcentral near the Canadian border.

Much smaller drawdown than last week and vs the 5 year average but the market knows this and has dialed it into the price. If the number is a surprise(higher or lower) that we will have a big price spike seconds after the release.

I will guess that if its a bullish surprise(much bigger than expected), that the lows are in for the year. 

https://www.cpc.ncep.noaa.gov/products/tanal/7day/mean/20200131.7day.mean.F.gif

By metmike - Feb. 3, 2020, 7:58 p.m.
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Seasonals


February : We are in the time frame now that usually features natural gas putting in a significant low/bottom.  Each year is different. Some years it comes later than others but prices almost always go higher, starting.....soon.  The strongest time frame for natural gas prices is from mid-Feb to mid May.  Years with a very chilly end to Winter/start to Spring greatly enhance this reliable seasonal tendency with bullish drawdowns. Being short right now, with expectations for lower prices(though possible) seems like a crazy idea for anybody that doesn't have a profound, inside understanding of ng that is far superior than the average trader..............and it probably would only work briefly because prices are very likely to be higher in April/May than they are now. 

January 28: The lower seasonals are running out of time. We are in a time frame where a seasonal, even yearly significant bottom is often made........followed by several months of strong price action. The bottoms somtimes dont occur until the end of Feb but usually are before that. Each year is different.

January 21: Seasonals are lower and getting tremendous help from mild weather with prices dropping to the lowest during January since 1999!  If it turns much colder in early February and February is cold, the lows for the year should be in, with the seasonal bottom occurring just a bit earlier than usual(but it varies from year to year).

January 5th: Seasonals are lower now, until mid/late February, when they turn up with the strongest upward price movement seasonal signal of the years from then to mid June.


Dec. 25th:

Regarding seasonality, price strength often seen in early/mid Dec. fades in late December and seasonals are actually lower/weaker from late December thru mid February, when prices often start their very reliable seasonal increase in the Spring. Temperatures will matter more than these historical tendencies during January.

Dec. 16th:

I'm repeating my comments from last week below because they explain some of the recent strength in NG prices, despite the lack of bitter cold:


Dec. 9th:

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 Futures (NG) Seasonal Chart

                             

By metmike - Feb. 3, 2020, 8:51 p.m.
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Right after this evenings open, something happened that I speculated about earlier. 

                "By metmike - Feb. 3, 2020, 10:58 a.m.            

            The contract low for ngh is 1.812 from last week. We are within striking distance right now at 1.820.

There should be a lot of sell stops below 1.812 one would guess, so trading below there could result in a big spike lower that might or might not have any follow thru."

Somebody sold a ton of ng right after the open and it triggered a ton of sell stops, with a knee jerk spike lower that came right back within seconds.

The new 768 European model(monthly) had just been updated and keeps things pretty mild for the next month-warmer than the previous run from last week.......which is a wildly speculative guess on my part for why somebody might decide to sell so aggressively at contract lows(bailing on longs/crying uncle finally as they finally gave up on their hopes for it to turn much colder later this month).

This looks to be potential panic selling which happens at major bottoms(buying at tops).

Not that we can't trade MUCH lower because thats very possible and this trader(s) being scared of that might havae been why they decided to hit the bids with market orders vs pricing their sell order.........."I want out now!" orders

There could have been a tricky strategy to hit the sells stops that they knew were there and buy them back a couple of ticks lower from the momentum of sell stops pushing down a bit more which is something certain traders emplay at times but the price bounced back lighting fast, so they would have to be pretty dang nimble to get a few ticks out of that. 

For instance. The previous contract low was 1.812.   We know for sure that speculative longs are ALL under water down here at contract lows.  Some of them are trying to decide how much more money to risk and sweating it. Those that use stops, especially short term speculators will look at contact lows as super, mega support.  

Very often, there are more stops within the first several ticks into new contract territory than anywhere else. The thinking is "If we can't hold contract lows, then the price could go much lower, so I better protect myself with a sell stop just below that contact low". 

So, as I was guessing earlier, there would likely be a ton of sell stops at 1.811, 1.810 and 1.809..........which immediately become selling at the market orders. Since we don't have enough standing buy orders to fill the sell orders, the market price quickly drops to 1.808, 1.807 and so on to fill stops that might have been hit a few ticks higher then had to be filled lower because of the lack of buyers. 

In this case, the selling hit a brick wall at 1.805 because, the buy stop orders ran out/all got filled and/or there was enough buy orders to satiate the selling.

The price immediately turned back up and back above the 1.812 contract low and then some. So who made the most money and who lost the most money on that spike lower?

The panic sellers and the ones with the stops that got hit below 1.812 lost the most money for sure. They sold NEW contract lows that bounced back. It doesn't get any worse than that. .....selling the lowest price possible.

Who made the most money(on a day trade type trade)?

Those that bought ng below the previous contract lows on the spike lower from hitting stops. But here's the thing on selling to hit stops. 

You might be able to sell  20 contacts at 1.811 and know that would force the price down to 1.810..............where there might be 100+ contracts resting sell stops...........which immediately become selling at the market orders and instantly force the price down to 1.809(where there could be another 50 sell stop orders), so the price quickly gets overwhelmed by the imbalance in selling at the market from the stops being hit.

So the trader that sold just 20 contracts at 1.811, knows that they can buy them back several ticks lower with high confidence if the market is going to be flooded with selling at the market orders but, if especially foxy and knowledgeable can cover his short for those few ticks and anticipate the price bouncing back quickly when the sell stop momentum runs out..........and can be long 20 contracts from BELOW the previous contract low, so that when it comes back, he has a profit on the new position.

Larry can tell you that natural gas never goes straight in one direction without a ton of sudden, opposite direction moves that make no sense and often just below support or above resistance.........as if the market knew where to go to hit the most stops...............probably because it did for just that reason.


By metmike - Feb. 4, 2020, 10:12 a.m.
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NGI Tuesday Morning: 

March Natural Gas Called Higher on Mid-February Cold; Oil Prices Seen Curtailing Gas Output

     8:52 AM    

Continued signs of colder temperatures arriving around the middle of this month had natural gas futures trading a few pennies higher early Tuesday. The March Nymex contract was up 2.5 cents to $1.844/MMBtu shortly after 8:30 a.m. ET. 


metmike: European model (last 0z run) was looking colder for Mid-February but the GFS was not. 

By metmike - Feb. 4, 2020, 1:31 p.m.
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Weather Tuesday:  Euro was colder overnight, 12z GFS this morning was colder.

 https://www.marketforum.com/forum/topic/46940/

By metmike - Feb. 4, 2020, 5:57 p.m.
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NGI after the close on Tuesday: 

Natural Gas Futures Climb as Weather Models Finally Shift Colder; Permian Cash Leads Gains

     5:20 PM    

With tight supply/demand balances intact, natural gas futures posted a moderate gain Tuesday as a return to at least near-normal temperatures appears more likely by the middle of the month. The March Nymex gas futures contract settled near session highs at $1.872, up 5.3 cents. April climbed 4.0 cents to $1.902

By metmike - Feb. 5, 2020, 11:40 a.m.
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Wed morning from NGI: Natural Gas Futures Called Lower as Weather Risks Seen Skewing Warmer

     8:53 AM    

Coming off a rally in the previous session, warmer trends in the overnight weather data sapped the momentum from the natural gas futures market and sent prices several cents lower in early trading Wednesday. The March Nymex contract was down 3.0 cents to $1.842/MMBtu at around 8:30 a.m. ET


metmike: Models, once again turned much milder overnight-especially the EE(flipping from the colder look 24 hours previously-especially the EE then)

It will be tough, maybe almost impossible......no matter how warm the forecast is, to get big traders to short enough down here, at this time of year to make new lows. 


By metmike - Feb. 5, 2020, 1:34 p.m.
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Wonderful Wednesday! Here's your weather:

https://www.marketforum.com/forum/topic/47001/

By metmike - Feb. 6, 2020, 12:31 p.m.
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Another Bullish EIA Report Nudges Needle Slightly Higher for Natural Gas Futures


Weekly Natural Gas Storage Report

 for week ending January 31, 2020   |  Released: February 6, 2020 at 10:30 a.m.   |  Next Release: February 13, 2020 

                                                                                                                 -137 bcf    bullish                                                                                                                                                                                                                              

Working gas in underground storage, Lower 48 states Summary text CSV JSN
  Historical Comparisons
Stocks
billion cubic feet (Bcf)
 Year ago
(01/31/19)
5-year average
(2015-19) 
Region01/31/2001/24/20net changeimplied flow  Bcf% change Bcf% change
East598  638  -40  -40   476  25.6  539  10.9  
Midwest725  761  -36  -36   534  35.8  636  14.0  
Mountain136  143  -7  -7   106  28.3  137  -0.7  
Pacific210  210  0  0   173  21.4  228  -7.9  
South Central941  995  -54  -54   703  33.9  869  8.3  
   Salt281  297  -16  -16   246  14.2  263  6.8  
   Nonsalt660  698  -38  -38   457  44.4  606  8.9  
Total2,609  2,746  -137  -137   1,994  30.8  2,410  8.3  

Totals may not equal sum of components because of independent rounding.

Summary

Working gas in storage was 2,609 Bcf as of Friday, January 31, 2020, according to EIA estimates. This represents  a net decrease of 137 Bcf from the previous week. Stocks were 615 Bcf higher than last year at this time and 199 Bcf above the five-year average of 2,410 Bcf. At 2,609 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. 

 Working Gas in Underground Storage Compared with Five-Year Range 

Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.

By WxFollower - Feb. 6, 2020, 12:55 p.m.
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 Also, the much colder 12Z GEFS continues the interesting trend of colder GEFS runs and likely has helped NG rise to session highs. Most important will be what the Euro and especially EPS show as the last EPS was quite a bit warmer than its prior run. 

By metmike - Feb. 6, 2020, 2:50 p.m.
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Agree Larry.

Euro was not as cold as the GFS but was colder than the previous run of the Euro.


NG sold off hard after it came out.

By metmike - Feb. 6, 2020, 7:41 p.m.
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Unfazed by Bullish EIA Report, Nymex Natural Gas Futures Hold Steady

                                


                             

storagejan31    

                                          

Natural gas futures traders were content to leave positions intact Thursday despite another bullish storage stat and ongoing weather model volatility. The March Nymex gas futures contract settled at $1.862/MMBtu, up one-tenth of a cent from Wednesday’s close. April was unchanged at $1.887.

Spot gas prices were mixed as frigid air lingered across part of the country. Steep discounts were seen in West Texas, while the NGI Spot Gas National Avg. fell 4.0 cents to $1.760.

Futures trading has been rather choppy throughout the week, so the lack of movement was no surprise even when accounting for Thursday’s bullish government storage data.

       

The Energy Information Administration (EIA) reported a 137 Bcf withdrawal for the week ending Jan. 31, coming in well above estimates that clustered near a 130 Bcf pull.

March Nymex futures, which had been trading a couple of pennies lower day/day ahead of the report, quickly erased the losses but struggled to move much higher. The prompt month traded in a relatively tight band of around 7 cents before going on to settle on the lower end of the range.

Market observers on energy chat platform Enelyst.com noted that despite the overwhelmingly bearish weather pattern so far this winter, supply/demand balances remain supportive.

“These low prices are getting this market tight,” said Enelyst managing director Het Shah.

Bespoke Weather Services said the 137 Bcf withdrawal “is another strong number,” among the tightest that it has seen when adjusting for weather.

However, this week’s EIA figure is still dwarfed by last year’s 228 Bcf withdrawal for the similar period, but it did come in just 6 Bcf below the five-year average withdrawal of 143 Bcf, according to EIA.


Working gas in storage as of Jan. 31 was 2,609 Bcf, 615 Bcf above last year at this time and 199 Bcf above the five-year average of 2,410 Bcf, according to EIA.

“With this week’s data showing lower production, we should see another strong one next week, albeit lower in absolute terms given lower weather demand,” Bespoke chief meteorologist Brian Lovern said. “The pattern’s demand has been low enough to still outweigh the tighter balances. That, plus fears of liquefied natural gas shut-ins have kept pressure on prices.”

Indeed, traders have grown increasingly concerned that the global gas glut and low price environment would eventually lead to shut-ins of U.S. liquefied natural gas (LNG) exports. Now, fears over the coronavirus’ potential impacts on global demand have added to those worries.

Reports circulated Thursday that state-run China National Offshore Oil Corp. declared a force majeure amid the outbreak, meaning the LNG buyer is rejecting some contracted shipments as efforts to contain the coronavirus disrupt shipping traffic and demand.

Total SA’s Philippe Sauqet, who heads the Gas, Renewables and Power segment, said the company, after consulting with legal analysts, rejected one force majeure it received. He warned that if a longer-term situation arises in which LNG cargoes can't be offloaded at Chinese terminals because of the virus, Total could reassess because then "there might be a real case for force majeure.”

Meanwhile, on the home front, traders struggle to make heads or tails of weather models. The generally more trusted European model has made major changes in each of its runs going back to overnight Tuesday.

After the Global Forecast System gained nearly 20 heating degree days (HDD) in the midday run, it was of considerable interest to see if the afternoon European model would also see a colder trend, especially after it lost a hefty amount of demand Wednesday night, according to NatGasWeather. The afternoon European model shifted colder through Feb. 15 but then milder for Feb. 16-18 by showing less impressive cold air into the northern United States.

“Overall, the latest European model gained 6 HDDs back of the 18 HDDs it lost last night,” NatGasWeather said. “There's still a decent amount of chilly air across the Midwest and Northeast Feb. 14-20, although the southern half of the country will remain rather mild to counter.”

West Texas Sheds $1-Plus

With a midweek winter blast boosting demand, prices throughout the Permian Basin enjoyed considerable strength in recent days.

El Paso Permian cash prices rose as high as $1.520 on Wednesday as overnight temperatures in Lubbock, TX, plummeted to the mid-teens. But although lows are expected to remain below freezing through Monday, much milder daytime highs sent prices crashing back to earth Thursday.

By metmike - Feb. 9, 2020, 2:49 p.m.
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Very mild outlook for the 2nd half of February.....bearish weather(cold this week)

Sunday Weather: https://www.marketforum.com/forum/topic/47156/

By metmike - Feb. 9, 2020, 2:58 p.m.
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The natural gas rig count has been dropping hard for the past year. We peaked at 202 rigs early last January. This latest report showed us down 1 more at only 111 rigs. The lowest in over 3 years!


We are already seeing tighter supplies and this means higher prices for the rest of the year, after we hit our seasonal bottom here. 

Near term very bearish weather and robust storage are keeping pressure on the front months.  However, at some point(soon?) this will not be able to keep prices this low. 


https://ycharts.com/indicators/us_gas_rotary_rigs


      

US Natural Gas Rig Count:

        

111.00  for Wk of Feb 07 2020

                      

US Natural Gas Rig Count is at a current level of 111.00, down from 112.00 last week and down from 198.00 one year ago.  This is a change of -0.89% from last week and -43.94% from one year ago.

                                                            

Data for this Date Range                                                                     
D
Data for this Date Range
 

Jan 31, 2020-112.00                                    
Jan. 24, 2020

                115.00            
Jan. 17, 2020                120.00


Jan. 10, 2020                119.00            
Jan. 3, 2020                123.00            
Dec. 27, 2019                125.00            
Dec. 20, 2019                125.00            
Dec. 13, 2019                129.00            
Dec. 6, 2019                133.00            
Nov. 27, 2019                131.00            
Nov. 22, 2019                129.00            
Nov. 15, 2019                129.00            
Nov. 8, 2019                130.00            
Nov. 1, 2019                130.00            
Oct. 25, 2019                133.00            
Oct. 18, 2019                137.00            
Oct. 11, 2019                143.00            
Oct. 4, 2019                144.00            
Sept. 27, 2019                146.00            
Sept. 20, 2019                148.00            
Sept. 13, 2019                153.00            
Sept. 6, 2019                160.00            
Aug. 30, 2019                162.00            
Aug. 23, 2019                162.00            
Aug. 16, 2019                165.00            
Aug. 9, 2019                169.00            
Aug. 2, 2019                171.00            
July 26, 2019                169.00            

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

  
July 19, 2019                174.00            
July 12, 2019                172.00            
July 3, 2019                174.00            
June 28, 2019                173.00            
June 21, 2019                177.00            
June 14, 2019                181.00            
June 7, 2019                186.00            
May 31, 2019                184.00            
May 24, 2019                186.00            
May 17, 2019                185.00            
May 10, 2019                183.00            
May 3, 2019                183.00            
April 26, 2019                186.00            
April 18, 2019                187.00            
April 12, 2019                189.00            
April 5, 2019                194.00            
March 29, 2019                190.00            
March 22, 2019                192.00            
March 15, 2019                193.00            
March 8, 2019                193.00            
March 1, 2019                195.00            
Feb. 22, 2019                194.00            
Feb. 15, 2019                194.00            
Feb. 8, 2019                195.00            
Feb. 1, 2019                198.00
By metmike - Feb. 9, 2020, 5:37 p.m.
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Lower open this evening.

By metmike - Feb. 10, 2020, 12:09 a.m.
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As expected, ng had a gap lower open.

Since it closed near the lows on Friday, it didn't take much so the moderately lower open and high was 1.813 in ngh(March).

The low on Friday was 1.844, so the gap now is between 1.844 and 1.813.

The previous contract low was 1.804 from Feb 6th going from memory.  We are currently just below that at 1.801 and a low of 1.788


There is a decent chance that this ends up being an exhaustion gap, which would be confirmed if/when we trade above 1.844 and fill the gap. Exhaustion gaps most often happen after a long move in one direction is exhausted by running out of traders that want to position in the direction of that move or running into enough big traders that have decided the price represents value and are willing to step in aggressively.


Technically, having any gap like that means that market sentiment has shifted so strongly in one direction(for price expectations) that it completely jumps over or UNDER a band of prices between the previous days low(in this case) and the new days high.

The value of that commodity(or stock) has been repriced into a new range lower based on some powerful shift that quickly (over night or over a weekend) changed the mindsets of traders doing the pricing.

This big new change is often powerful enough so that its superimposed on the pricing structure and overwhelms everything else that existed before.  In this case, adding extra warmth for the 2nd half of February.

Something that powerful, usually sticks around for awhile and this is especially obvious when a gap like that marks a break away gap.............is followed by prices that continue in the direction of the gap(lower in this case).

As long as this imposing force continues to hang over the market, the price is unable to resist it/go against the heavy pressure that its imposing(warm temperatures in this case that have been reducing demand).

But sometimes, break away gaps or any gaps turn into exhaustion gaps.  This happens, when the imposing, price pressuring force weakens and especially if it reverses....or if it gets dialed in and other factors take over(this warm weather is a huge deal but at some point in Feb. will be unable to keep us going lower because:

1. The supply side dynamics appear to be really tightening for the first time in years.

2. No way can prices stay this low for very long.

3. Very strong seasonals start kicking in with increasing support over the next month.

4. Big funds have big shorts. They helped pressure prices to these low levels............lowest since 1999 but I can't imagine they would be adding  much down here. So their selling  will be dried up. If I were them, I would be covering/buying as much as possible anywhere close to this price.


Technically, when we see the price filling the gap and getting back into the higher price range above the gap(before the gap) the market is telling us that the overwhelming price pressuring force is no longer affecting traders mindset enough to cause them to think the value is at an entirely new lower level anymore. 

We can always guess about what we think the strength of the force is or should be but the markets reaction around the gap tells us exactly what its affect is, in the only way that counts.........how its affecting the trading behavior of traders. 

If they change their frame of mind and become willing to pay the higher prices that were in affect before the gap once again............which causes prices to rise thru the gap and completely fill the gap, then we know the pressure from the gap causing force is no longer great enough, in combination with other factors to keep the price down.

This has profound meaning because it means the previous aggressive selling and buyers drying up has exhausted itself. 


You've heard that the cure for low prices is..............low prices. Whether that will be kicking in now or whether it will later this month, there is no way the price of natural gas will stay down here for very long. Supplies will start dropping off  even more and EIA reports have already started to give us bullish numbers (last 2 weeks) because you can't make money in the ng industry with prices this low.

If the weather shifts suddenly to much colder and the end of Feb and/or March is cold. There is a 98% chance that ng prices will go higher.

It's too late in the Winter to  eat into a storage surplus and get it back to even with the 5 year average. However, at these prices, just the prospects for big late season drawdowns could be pretty bullish. 

But the weather right now is  extremely bearish and is the main reason for us to be at life of contract lows.


By metmike - Feb. 10, 2020, 5:59 p.m.
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By metmike - Feb. 10, 2020, 6 p.m.
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NGI after the close:

                  

Dramatically Warmer Weather Forecasts ‘Final Nail in the Coffin’ for Natural Gas

     5:22 PM    

A major shift in weekend weather forecasts that may solidify this winter as one of the warmest on record sent Nymex natural gas futures plunging to fresh lows on Monday. The March Nymex contract tumbled 9.2 cents to settle at $1.766/MMBtu. April fell 8.8 cents to $1.804. 

By metmike - Feb. 11, 2020, 10:41 a.m.
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metmike:  Not much change.

Natural Gas Intelligence Tuesday early:

Overnight Trends Mixed From Major Weather Models as Natural Gas Futures Steady

By WxFollower - Feb. 11, 2020, 3:22 p.m.
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 My take is that NG is up modestly on a combo of slightly colder forecasts/0Z models vs 24 hours earlier and an even colder 12Z EPS vs 0Z EPS. With NG so cheap, it makes sense that the slightest cooling in models/forecasts is easily enough for some bounce. Added to that may be a boost from the coldest air of the season for the Midwest and NE US late this week. Actually, that cold shot got stronger over the weekend and, therefore, may not have been fully dialed in yet after yesterday's big drop.

By metmike - Feb. 11, 2020, 3:40 p.m.
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Agree 100% with that Larry!

Also, 

I added this to my weather page earlier:


NEW:  The long lived upper level ridge in the Southeast US will be breaking down during week 2! This will allow cooler air to affect the East/Southeast. However, air masses will not be very cold coming from the Pacific or from Canada in week 2.

By WxFollower - Feb. 11, 2020, 5:28 p.m.
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Mike,

 Now the late week cold is showing not quite as cold as we get closer though it is still quite cold/at or near coldest of season to date. However, I'm also noticing that model consensus is showing a cold airmass late week 1 to early week 2 that was pretty much not even on models just a couple of days ago. Did you notice this? It reminds me of this first one that was hardly on any models 5 or so days ago.


 It is as if cold air masses are sneaking in and first showing up during week 1 now instead of first appearing in week 2. So, now the models, especially GFS ops, are showing cold air entering the country ~2/17 and affecting down to the SE 2/21. I don't think this was on models nearly to this extent just 24 hours ago. The GFS now has significantly colder than normal for the US 2/19-21. But with GFS cold biases often in play, I think we at the same time have to be cautious, too, that it is going too far. But even the EPS has been trending colder than its prior runs then. The air coming in colder late in week 1 is obviosuly much more believable than it showing up late in week 2.

By metmike - Feb. 11, 2020, 11:26 p.m.
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Larry,

I see what you are saying about the colder updates late in week 1 that were not there several days ago. This is an astute observation. 

I am thinking that this might be connected to  the models catching on to a potential new pattern that will feature the greatest positive anomaly to upper level heights in the vicinity of the far Pacific Northwest Coast.

This could be associated with a PNA that turns positive and the demise of the long lived upper level ridge/positive anomaly in the Southeast.

For most of the year(back to December even), that tenacious upper level ridge in the Southeast has been underforecast in week 2 and probably responsible for models being too cold at that distant period.

Cold air has not been able to penetrate very far southeast with the ridge there. With it being obliterated, cold air masses and upper level energy is going to be able to dig farther southeast than they have been able to do for a very long time. 

The air will not be very cold.........because it will be so mild in Canada and the flow will still favor Pacific origin air masses that track across the country but with the resistance in the Southeast from the ridge being gone, they should be able to push right thru.......and be much cooler than recent much above temps. 

I think the NWS 8-14 day is missing this cool down in the Southeast and will be updated cooler as the week goes on.  Not below average temps but closer to average vs the MUCH above temps for weeks. 


So its sort of a what came first, the chicken of the egg question on these changes (-:

Is the Southeast ridge breaking down allowing the colder air to penetrate farther east with waves tracking across the country.....or, is the energy associated with the waves coming over top of the new Pac NW ridge and riding downstream, battering the Southeast ridge and trying to carve out  a modest trough(at first) to replace it?

Of course there must be something new (in the Pacific) that will cause the new Pac NW ridge to build and we can keep backing up to that point too.

This potential new pattern does not have much northern stream/high latitude involvement or cold air and is mostly a mid latitude feature......which is moving around, mostly Pacific origin air masses from west to east and then possibly from nw to se if a weakness/trough develops in the Southeast. 


If we can get the upper level ridge around the Pac NW to build MUCH farther north,......lets say to NW Canada/Alaska, then waves coming down on the backside and digging southeast could tap some air masses from higher latitudes and bring them along for the ride............into the US. 


But the pattern up until near the end of week 2 is the complete opposite of that in the higher latitudes especially.

Strong NEGATIVE anomalies over Alaska with the upper level ridge building in the PAC NW.  In between those 2 features, Pacific air will be gushing eastward and flooding Canada from west to east. This is a classic ++AO pattern. 

Low pressure/heights in the  high latitudes, and higher heights in the mid latitudes/underneath..............all the cold stays trapped in the north. 

When energy in the flow, then turns southeast and heads in the US, with any cold fronts,  it will tug down air from Canada............ but if we back up to the origin of that air..........it came from the Pacific, not the Arctic because of the upstream flow described above. 

We need amplification in the ridge Pac NW to MUCH, MUCH farther north to allow waves to pull more air that came from higher latitudes vs  coming from  the Pacific as described above. 

By metmike - Feb. 12, 2020, 12:03 a.m.
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Larry,

What I think will be interesting is what NG will do if/when we got back to the gap lower from Sunday Night vs the close on Friday.

Any increase in cold that continues for a few more days and we should fill the gap which would be powerful technical signature telling us that it was an exhaustion gap.

The timing, in mid Feb is perfect for the seasonal low.  The fact that it also happens at the end of a huge move down(from close to the warmest Winter ever) , along with prices being the lowest for Feb since 1999 AND the funds having massive shorts AND the rig count dropping to something like half the rigs vs last year and the lowest in  3 years would be screaming BULLISH! BULLISH! Go long.

However, a continuation of the very mild temps offsets the bullishness. 

By metmike - Feb. 12, 2020, 12:07 a.m.
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NGI after the close Tue:


Forecasts Less Bearish but ‘Not Exactly Bullish’ as Natural Gas Futures See Small Rebound

     5:30 PM    

After sinking to a four-year low to start the week, natural gas futures bounced a bit Tuesday as a late-week cold blast was seen boosting demand possibly to the highest level of the winter so far. The March Nymex gas futures contract climbed 2.2 cents to settle at $1.788/MMBtu. April rose 1.9 cents to close at $1.823.

By metmike - Feb. 12, 2020, 12:58 a.m.
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0z GFS ensemble was colder again.


Larry,

On my long winded post. Are you also noticing some of that stuff, mainly the Southeast ridge going bye bye?

I believe this was also the feature that caused the record heat in September of last year as well as the drought in the Spring/Summer in the Southeast and the moisture pump for the excessive rains in the Midwest/Eastern Cornbelt that led to the latest planting ever there.

Another  affect of the Southeast ridge breaking down would be a drier pattern.


When the ridge departs, air masses will not have as much south to north movement(on the backside) that spreads moisture laden air from the Gulf, northward. 

Mainly dried out Pacific air will be around most of the time............and the absence of southern stream waves that have moved from southwest to northeast on the backside of the high...............where a very powerful jet stream has been around on numerous occasions. 


By WxFollower - Feb. 12, 2020, 1:38 a.m.
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Mike,

  Yes, indeed, I've been noticing the SER going bye bye and more of a +PNA pattern and a much cooler SE and Mid-Atlantic states. Very good observation.


And now it looks like the 0Z Euro op is coming in colder thus continuing the colder trends for next week.

By metmike - Feb. 12, 2020, 10:26 a.m.
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In the technical discussion, I completely forgot to mention the reversal up pattern traded on Tuesday. 

NG traded to new contract lows early, then closed higher for the day.

As you mentioned, additional guidance overnight continued to come out colder to feed the bullish interpretation on new weather.

We got above the previous contract lows and that has been support since then and have almost completely closed the downside daily gap from Sunday Night..........a couple of ticks shy at the highs today.


By metmike - Feb. 12, 2020, 10:26 a.m.
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By metmike - Feb. 12, 2020, 12:24 p.m.
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Wednesday Weather(colder overnight, especially European model) 12z GFS ens...late morning is colder/MUCH colder late in week 1/ early week 2, than a tad warmer.

https://www.marketforum.com/forum/topic/47326/


NGH high of 1.841 has been hit on a couple of occasions today.

9:57a then 11:05 am........when the much colder GFS ens was coming out late week 1/early week 2.

I think we need a new high by a tick or so to completely fill the gap from Sunday Night. 

Selling at the top of the gap(lack of follow thu buying) has SO FAR been enough to keep that from happening but the price is also holding up well...........poised to fill the gap if the European model comes out colder.

By WxFollower - Feb. 12, 2020, 4:13 p.m.
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Mike,

 I'm sure you know that after many hours this morning of failure, your prediction was correct as the top of the gap ($1.842) was finally filled and then exceeded starting at 1 PM CST when the much colder 12Z Euro ensemble was coming out. That was a whopping 17 HDD colder than the 0Z per the site that I follow. That 17 is one of the largest changes colder that I can recall from one run to the next. Not only that, but the 0Z of today was ~17 HDD colder than the 0Z of yesterday! So, nearly 35 HD colder on the EPS in the span of just 3 runs! I've seen it warm just about that much that fast once this winter but don't recall that fast a cooling though I could be forgetting.

By metmike - Feb. 12, 2020, 6:42 p.m.
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Thanks Larry!

What makes this even more shocking is that prior to this week, the models had a big cold bias for many weeks and updates would keep coming in warmer as the period got colder.

We became more and more skeptical as time went on in the maps that showed it turning colder towards the end of week 2. 

Breaking down that upper level ridge in the Southeast is letting the cold air in. ....not much resistance now.

Maybe that has alot to do with it. 

The flow pattern is pretty good for air masses to track from north to south after they get into the US now with surface high pressure systems in a better position to push the cold deeply into the south. ..............alot of northerly component(north to south) in the winds for much of the time at the surface. 

But Canada may be running short on cold air during week 2 as the flow in Canada is zonal/mild with Pacific air masses spreading across most of the country. 

It looks like the last REAL cold front that has Arctic air will hit late week 1 in the US and spread deeply into the US into early in week 2............but the reservoir of major cold in Canada will be all tapped out after that.

 So any cold fronts after that will have origins from the Pacific Ocean.  At least if the ++AO continues and we don't have more upper level ridging in higher latitudes.


This last  18z GFS ens was even colder yet with the late week 1/early week cold coming in. One of the biggest changes, that has been the new feature mentioned is that the biggest cold anomalies are no longer just in the northern US, the temp departure vs average is just as cold all the way to the Gulf Coast as it is farther north.

This means at least twice the area/population that will be needing to crank up the furnaces vs the recent cold that did not affect the south.

A lot of people live in the south and they have been spoiled by the mild Winter. Cold waves of this nature are the ones that can really rack up some hefty HDD totals. 

But again, the supply for major cold after that one will need to come from a different pattern than the one the models show late week 2.


 

By metmike - Feb. 13, 2020, 11:06 a.m.
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From NGI earlier:

Market Shifting Attention to EIA Storage Number as Natural Gas Futures Called Higher

-us-natural-gas-supplies-down-115-billion-cubic-feet-2020-02-13


EIA data show weekly U.S. natural-gas supplies down 115 billion cubic feet    

https://www.marketwatch.com/story/eia-data-show-weekly-us-natural-gas-supplies-down-115-billion-cubic-feet-2020-02-13

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 115 billion cubic feet for the week ended Feb. 7. That compared with a decline of 108 billion cubic feet forecast by analysts polled by S&P Global Platts. Total stocks now stand at 2.494 trillion cubic feet, up 601 billion cubic feet from a year ago, and 215 billion cubic feet above the five-year average, the government said.


metmike: EIA data continues to support a tightening supply..........from the lowest FEB price in the last 21 years.  This was at least the 3rd straight week of a bullish number.


The weather overnight was milder!

By metmike - Feb. 13, 2020, 11:11 a.m.
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Weekly Natural Gas Storage Report

 for week ending February 7, 2020   |  Released: February 13, 2020 at 10:30 a.m.   |  Next Release: February 20, 2020 

                                                                                               -115 BCF           bullish for the 3rd week in a row                                                                                            

Working gas in underground storage, Lower 48 states Summary text CSV JSN
  Historical Comparisons
Stocks
billion cubic feet (Bcf)
 Year ago
(02/07/19)
5-year average
(2015-19) 
Region02/07/2001/31/20net changeimplied flow  Bcf% change Bcf% change
East569  598  -29  -29   447  27.3  498  14.3  
Midwest694  725  -31  -31   496  39.9  587  18.2  
Mountain126  136  -10  -10   96  31.3  131  -3.8  
Pacific202  210  -8  -8   157  28.7  222  -9.0  
South Central903  941  -38  -38   695  29.9  841  7.4  
   Salt269  281  -12  -12   247  8.9  259  3.9  
   Nonsalt634  660  -26  -26   448  41.5  582  8.9  
Total2,494  2,609  -115  -115   1,893  31.7  2,279  9.4  

Totals may not equal sum of components because of independent rounding.

Summary

Working gas in storage was 2,494 Bcf as of Friday, February 7, 2020, according to EIA estimates. This represents  a net decrease of 115 Bcf from the previous week. Stocks were 601 Bcf higher than last year at this time and 215 Bcf above the five-year average of 2,279 Bcf. At 2,494 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. 

 Working Gas in Underground Storage Compared with Five-Year Range 

Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2

By metmike - Feb. 13, 2020, 12:26 p.m.
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EIA Storage Report Shows ‘Another Strong Number,’ But Natural Gas Traders Shrug

    11:22 AM    

The Energy Information Administration (EIA) Thursday reported a 115 Bcf weekly withdrawal from U.S. natural gas stocks, to the bullish side of expectations..

By metmike - Feb. 14, 2020, 1:51 p.m.
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Weather Friday:  Milder overnight on the 0z Euro, but 12z GFS ens was MUCH colder........again

https://www.marketforum.com/forum/topic/47406/


By WxFollower - Feb. 14, 2020, 3:23 p.m.
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Even with the warmer 0Z GEFS/EPS vs 24 hours earlier, I think the main reasons for today's pre-12Z models modest rise were a very late dialing in of the current very cold Midwest that wasn't even on maps til 7 days ago (coldest of the season), a late dialing in of next week's strong and much more widespread cold that only first showed on maps around 3 days ago and intensified further from there, a retroactive dialing in of yesterday's bullish EIA, which was the 5th bullish EIA in a row, and still vey cheap prices. Also, when compared to 2 days ago, today's 0Z EPS was actually colder. Furthermore, the 6Z GEFS was a much colder run than the 0Z. Then came the similarly cold 12Z GEFS run as Mike mentioned as well as the colder 12Z Euro operational. And the seasonal factor of a low around now may have also been in play in an indirect way I suppose.

By metmike - Feb. 14, 2020, 6:56 p.m.
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Extremely well said Larry, hitting on almost all the relevant points. Thanks.


I would add one other element. The gap lower Sunday Night.

The bottom of that gap(from the Sun open and high that day) was 1.813. The top of the gap was 1.842 (from the low of the previous Fri-a week ago, today).

We started filling the gap earlier this week..........very early Wed. AM when the 0z models, especially the Euro turned sharply colder. I think that it was completely filled later in the day after the 12z models continued to get colder. 

After getting back into the previous weeks trading range, completely above the gap for awhile, we could not stay there because of very mild portions of the forecast, especially week 2. 

Last night's milder 0z models pressured prices back below 1.8 briefly but we could not stay down there because of all the factors that Larry mentioned.

When a market is no longer able to stay down on bearish news, after a long, sustained and huge move lower............then it's often a sign that the lows are in.

With the much more bullish EIA numbers recently and the cold this week and coming up, we should have some robust draws coming up.


Also, there the rig count dropped by 1 again........as we have the lowest rig count in over 3 years and just over half of the rigs searching for ng that were active a year ago.  That's what the lowest Feb prices in 21 years will do.

Funds had a record short over a month ago and surely are still major short/did not cover all of it. Any news on that?

With signs of a major bottom screaming, if we can just get the weather in March to help us out with some unseasonable cold, prices should rebound sharply and and fill the gap lower from January 21, Sunday night(between 1.963 and 1.977).

We could do that next week if  late week 2 models continue to suggest a pattern change to much colder.

1. The Southeast US ridge is dead. This is huge. It changes everything and allows cold air farther north to penetrate all the way to the Gulf Coast.

2. The +++AO plummets at the end of 2 weeks, and the NAO drops too, along with the PNA being a tad positive. This is exactly what we need to elevate chances for a cold March in the US.  Initially, air masses coming from Canada will not be that cold in week 2.  However, building upper level heights in the higher latitudes(which is causing the big AO plunge in 2 weeks) if continued, would start tapping some very cold air. 

However, if the southern stream is more dominant and deflects the affects of the northern stream described above to the north, then odds go up for a mild March.



By metmike - Feb. 14, 2020, 7:28 p.m.
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We also closed well, especially late afternoon............above the top of the gap.

Still a tad lower for the weekly close(vs last Friday's close) but:

 Closed near the highs of the week after setting contract lows early in the week. Potential gap higher Sunday night if models turn colder over the weekend would be extremely bullish. 

This also gave us a Doji hammer type bar on the weekly charts(spiking to new contract lows but closing very close to the high of the week) -bullish reversal pattern formation. 

 

Hammer Doji – Bullish Reversal Candlestick Patterns

https://www.investdiva.com/investing-guide/hammer-doji-candlestick-patterns/

Hammer Doji - Bullish Reversal CandleStick Chart Patterns 


By metmike - Feb. 14, 2020, 8:05 p.m.
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The ng rig count was down to 110, the lowest since October 2016. Down from 200 in early 2019, which was the peak. 

https://ycharts.com/indicators/us_gas_rotary_rigs

As Larry mentioned, we've had 5 straight bullish EIA storage reports, so the supplies are finally  drying up in a market that was oversupplied for a couple of years but could never get ahead because of increased weather demand.

That  weather demand fell apart the last 2 months and has allowed for a big surplus to build quickly............and caused record low prices. 


There was great incentive for sellers when prices were higher and we were adding a ton of ng vs the seasonal average. 

Prices are the lowest in the last 21 years for the month of February and we will not be adding to the surplus like before. Sellers will be asking what the downside potential/profit is for a market down here, at 1.850?

With the supply side tightening up from all indicators, the refill/injection season could be weak. 

Extreme temperatures will now have a better chance to erode the surplus vs previous storage levels at the same time of year. 

It all sounds bullish but if this very mild Winter that is now featuring a couple of big cold waves,  morphs back to unusually warm in March, it can offset much of that. 

If its warm enough in March for the surplus to grow, for instance. However, with  high confidence, if we have a very chilly March, prices will be higher to much higher in a month compared to February 14th. 

What trader would want to be short with all these other bullish factors AND bullish weather?

Besides warm temps in March, what other bearish factors could present themselves?

A big economic slow down. In late 2008/2009, the recession caused industrial demand for ng to plunge. I think it was January 2009, when we had one of the coldest air masses in years barrelling into much of the US and it hardly caused ng to pause on its plunge lower.

Of course that was also when natural gas from horizontal fracking was suddenly gushing in and prices the previous 5 years were historically, very, very high(2.5 to 5 times as high as they are now) and had a long way down to go.

Also, the Coronavirus is apparently affecting the global natural gas market (from a decrease in Chinese demand) that is major OVER supplied already. 


More on the next page.

Would less ng exports to China from the US have the ability to pressure prices?  Probably not and the Coronvirus will runs its course in a few months, with everything reverting back to the way it was before. 


By metmike - Feb. 14, 2020, 8:11 p.m.
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Report: The United States Will Be the World’s Top LNG Exporter in the Next Five Years


https://www.energyindepth.org/report-the-united-states-will-be-the-worlds-top-lng-exporter-in-the-next-five-years/


This trend is expected to continue with IEA predicting that by 2024 the United States will represent more than one-third (35 percent) of global natural gas production growth.

 

The Incredible Growth of U.S. LNG

The first shipment of U.S. LNG from the lower 48 states was exported in February 2016, and it has been full-speed ahead ever since. As Reuters reported shortly before the shipment left Louisiana:

“Expected to become an importer of LNG just a decade ago, the shale gas revolution in the United States that unlocked cheap, abundant supplies has wreaked havoc on global gas markets as LNG meant for the country was redirected around the world.”

U.S. LNG exports more than quintupled from 2016 to 2018, with the United States exporting a record nearly 1.1 tcf of LNG in 2018. That’s about 189 billion cubic feet (bcf) more than 2016 and 2017 combined.

And as the IEA report explains, there are no signs of this growth slowing down. At the end of May, the Department of Energy announced the Freeport LNG terminal in Texas was approved to export additional domestically produced natural gas. 

By metmike - Feb. 15, 2020, 12:34 p.m.
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Weather Saturday:  

https://www.marketforum.com/forum/topic/47459/


New colder pattern at the end of week 2?

Only if the northern stream amplifies..............with the high latitude upper level ridging building. 

By metmike - Feb. 16, 2020, 4:34 p.m.
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Sunday weather:


Euro Ensemble is colder.

GFS Ensemble was MUCH colder at 0z but has turned milder during week 2 vs that run. In fact, late week 2 of the 0z run had most solutions dominated by the northern stream and the 12z run have the southern stream taking over completely.

 https://www.marketforum.com/forum/topic/47496/

I think that ng prices would have been sharply higher overnight until the 12z GFS Ensemble came out this morning.

That much milder solution from almost every member at the end of week 2 is quite a shift and means great uncertainty.

Do you have anything Larry?

By WxFollower - Feb. 16, 2020, 5:47 p.m.
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Mike,

 Please delete this one as I accidentally did a double post. Thanks.

By WxFollower - Feb. 16, 2020, 5:47 p.m.
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Mike,

 As I've said before, I think you put too much emphasis on the end of week 2, the most unreliable of the entire run since it is so far out, at the expense of the rest of the runs. I'm not saying to ignore the end of week 2 as it is of some importance for sure. But I am suggesting not to harp so much on it and minimize the importance of the first 13 or so days. I assume you'll still not agree with me as you tend to stick with your opinions, which is of course fine. And mine is just an opinion, too. So, I mention that only fwiw.

 Sun 12Z vs Fri 12Z:

GEFS: ~-5

EPS: ~+14


 So, I'd say higher open.

By metmike - Feb. 16, 2020, 5:57 p.m.
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Thanks Larry,

Good advice.

The fact that the late week 2 maps change the most is why they are the most powerful.

Recently, we've seen much closer periods change more but thats a bit unusual.

Its the entire period that matters but if its a 2 day cold snap in week 1, then back to the same forecast, the market will often blip higher when those 2 days are coming out, then go right back down. 

Again, last week there were HUGE HDD's additions on several runs that you also noted with a post above on how extraordinary they were.........exceptions.