I wonder how long the price spread between October and November is sustainable.  You could make the argument that October is heading to contract lows.  

Looks that way. There's really nothing that is fundamentally bullish right now, except for the pressure on Merkel about the new Russian pipeline going in. But Oct/Nov are certainly moving opposite to each other.

Thanks Mark and Jim.

Heating degree days from cold are more important than cooling degrees from heat, starting in very early October. The mild forecast is bearish but its almost impossible for weather forecasts to feature enough extreme temperatures to be bullish this time of year. 

This was from NGI early today:

LNG Feed Gas Takes a Hit on Cove Point Maintenance as October Natural Gas Slides

A drop in liquefied natural gas (LNG) demand kept the pressure on gas futures near the front of the curve in early trading Monday.  The October Nymex contract was down 7.4 cents to $1.974/MMBtu at around 8:40 a.m. ET. The start of annual fall maintenance at the Dominion Energy Cove Point LNG terminal has cut… 

   September 21, 2020

I don't know if there is a better fade right now that when prices go up because "traders see greater LNG exports ahead"  

Jim. There have also been quite a few cancellations of exports lately. Optimistic as I may be, I have to take this into consideration. There's a lot of things going on in Europe and the Mid-East, that create a volitile environment for LNG. 

Certain countries in Europe are looking strongly at H2 as an energy source. Of course, the H2 will be derived from LNG, with a carbon capture element involved. Which increases price of service for them, but not necessarily a price increase in exported LNG. 

Also. (my mind is drawing a blank here) There are certain countries in the Mid-East, that need to import LNG for electrical generation, beyond their own capabilities. But they are purposely suffering their populations, in spite offront month lows in LNG prices. Later months are getting far too expensive for them. But as the capitalistic entrprenuer would say, "what are they going to do?"

There is also the second feed line from Russia to Europe to consider. Which is still in some negotiations for completion to export points. Something that Trump has pressured Merkel hard on. Mostly to protect our market to Europe, and Germany  too. 

Waiting to see how this all plays out politically. Current polls put Biden ahead. But, IMHO, they are skewed, as usual. Nonetheless, European markets are bracing for a potential Biden win. As is our stock market, nearly 2 months before the election.

Between the covid problem, and the upcoming election, there is a lot of uncertainty in many markets these days. Just my honest opinion. I play it day by day. Trade the breaks. Snag whatever profits I can. 20-100 pts. A profit is a profit. And better than a loss.

I agree Mark.  First you hear of all the orders for LNG, then you hear about all the cancellations.  You have to wonder how much of it is even true sometimes.  

And what is going on today in NG?  A short squeeze?  

Spending bill was approved.  My guess is that positivity spilled over into NG.

Been tied up this week re-mortaring the brick patio and wifes medical condition.

From Natural Gas Intelligence:

Natural Gas Futures Rise as Last Week’s EIA Print Potentially ‘One-Off Anomaly’

Bolstered by a strengthening weather-driven demand outlook, natural gas futures rebounded sharply in early trading Wednesday. The October Nymex contract had advanced 15.5 cents to $1.989/MMBtu at around 8:45 a.m. ET. The major weather models have now advertised net gains in projected demand for three consecutive days, Bespoke Weather Services said in its latest forecast… 

   September 23, 2020

An anomaly?  HAHAHA  Where do they come up with this stuff?  One anomaly has storage 600 bcf over last year?   I'll stick with short squeeze.  

"I'll stick with short squeeze. "

Thanks Jim

A short squeeze typically occurs when a stock or commodity becomes over valued in price(when supplies are low-the opposite of this situation) and they sell too early...........then traders have to cover when the price continues to new highs and they go under water.

It might happen near the contract expiration too as those traders are forced to cover their shorts before expiration. 

However, a short squeeze would not happen near the low end of a recent trading range, when shorts have a profit already.

I've been tied up all week but my opinion is that its being caused by an early season, big cold snap that will cause unseasonably high heating demand in the key, high population centers.

I've seen this happen several times before in early October.

The price move is not justified by these colder temperatures, especially at this time of year but there are a few other factors that caused this weather pattern change to be way over amplified in its affects on the market.

Extremely low prices, being oversold and still historically low rig counts. 

In addition, cold waves early in the heating season are always more powerful than late in the season in inspiring speculators because they can portend an upcoming season defining pattern that has time to have create massive drawdowns which make a substantial cumulative drawdown after several months.

At the end of the season, the same pattern will actually turn bearish soon, as cooling degree days replace heating degree days.

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Temperature Probability

Precipitation Probability

NGI after the close Wednesday:

October Natural Gas Futures Bounce Back Along With LNG, Demand Expectations

Natural gas futures on Wednesday rebounded in force after a steep slump earlier in the week, bolstered by signs of a liquefied natural gas (LNG) recovery, forecasts of greater weather-driven demand and new storage estimates that indicated containment worries may have been overblown. The October Nymex contract popped 29.1 cents day/day and settled at $2.125/MMBtu.… 

   September 23, 2020

I stand corrected, but I still call BS on the rally.  

I agree Jim, it's hard to justify the price being $3,000/contract more expensive today than yesterday. 

Such is the case for commodity trading based on speculators  mentality which usually doesn't focus on true value for the price on an individual day. ....especially natural gas.

Instead, its mob mentality that thinks "Is the price going higher? or is the price is going lower?"

If several  items turn bullish at once, enough traders decide the price is going higher and not "the price is going to $2 or the price is going to $2.1....................just higher and the bids get more aggressive, offers pull back until the bullish surge in trader mentality subsides.

Upcoming expiration might have amplified the move too. 

I just checked the charts and the 1.800 area that we just tested was super-mega support for NGV, so you have the added technical double bottom formation that added some ammo to traders mentality today.

Also, less than a month ago, NGV traded to $2.7 on similar fundamentals, so one can certainly make the case that the move down was way overdone and this snap back should be especially strong.

Forecast for tomorrow is +78. With today's run, it's going to be an interesting morning. Personally, I think that there are a lot of emotions running here too.

I couldn't agree more Mark.  We are well above the 5 year average and already have enough gas to have some left over when winter is over, unless there is some weather "anomaly".  And yes I used that word on purpose.  :)  

+66. This is crazy.

And at least another 60+ next week and maybe even the week after that!  NG is ALREADY at the 5 year average.  The bull case is WEAK!  

  ‹ See All Natural Gas Reports

Weekly Natural Gas Storage Report

 for week ending September 18, 2020   |  Released: September 24, 2020 at 10:30 a.m.   |  Next Release: October 1, 2020 

                                                                                                                                                                                       +66 BCF BULLISH!                                                                                                                                                                                                                                                                            

Summary

Working gas in storage was 3,680 Bcf as of Friday, September 18, 2020, according to EIA estimates. This represents  a net increase of 66 Bcf from the previous week. Stocks were 504 Bcf higher than last year at this time and 407 Bcf above the five-year average of 3,273 Bcf. At 3,680 Bcf, total working gas is  above 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 2015 through 2019. The dashed vertical lines indicate current and year-ago weekly periods.

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

7 day temps for the period for that EIA report.

Very warm Southeast-with some cooling demand, chilly northern border states-with some heating demand.

The market dialed in these record high supply levels earlier this year when prices were at record lows.

The ng market is looking ahead, as all futures markets do. The fundamentals have shifted to being more bullish. The record low rig count has not gone up much.

Industrial demand has recovered.

The weather ahead will determine whether we continue with the glut or if we start to draw down supplies.

The  La Nina this Winter is bullish with the potential for cold in some of the high population centers of the Midwest/East.

Long range forecasts don't display a great amount of skill though.

If the Winter is mild, then ng prices are too high and will crash lower again.

I'm envisioning Wiley E Coyote jumping up and down on NG that he has stuffed in every available hole and when he tries to pack it down it comes out of every gopher home in view.  (I wish I could find that clip on youtube, but if you are a fan, you know what I am talking about)

And we are supposed to believe that Wiley E Coyote is willing to pay top dollar to try and stuff more in?  I repeat what I said a couple weeks ago.  Storage levels where they are approaching $3.500 Jan is a tough sell.  

EIA’s Bullish Storage Injection Supports Advance of October Natural Gas Futures

The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 66 Bcf into storage for the week ending Sept. 18, comfortably below the low end of analyst estimates and reinforcing a morning rally for Nymex natural gas futures. Ahead of the EIA report, the October contract was up 8.7 cents at $2.212/MMBtu. The… 

The way things have gone this year, I might not be surprised to see Jan at $4+. And still stuffing more in the hole.

Jim,

The market traded what you are saying earlier this year.

It KNEW that supplies would be at record highs in late September many months ago. This is why Oct NG is still so far below the price of January.

There hasn't been enough time for the much more bullish fundamentals to start eroding this massive surplus.

Between now and January, the market sees the surplus eroding.

The ng market is not just trading absolute numbers in storage its trading, like all futures markets the RELATIVE changes. 

3.5 will be over valued if we have a mild early Winter but the market is trading this:

1. Are supplies growing vs the average and expectations?

2. Are supplies shrinking vs the average and expectations?

The market says..............so what if right now, at this moment we have record supplies.........we knew that months ago. This is why Oct NG traded below $2.

Supplies are shrinking vs the average and expectations which is bullish and doesn't inspire aggressive shorting..............until bearish weather comes in to trump that. 

October Natural Gas Futures Extend Rally as Storage Surplus Fears Subside

Natural gas futures soared for a second consecutive day on Thursday after a light storage build provided a positive surprise and liquified natural gas (LNG) levels further recovered from interruptions imposed by a furious storm season in the Gulf of Mexico (GOM). The October Nymex contract jumped 12.3 cents day/day and settled at $2.248/MMBtu. A… 

By Kevin Dobbs

September 24, 2020

Friday early comment:

Natural Gas Futures Pare Gains as Analysts Continue Mulling Lean EIA Print

As analysts continued to digest the implications of the latest government inventory report, natural gas futures early Friday pared some of their recent gains.  The October Nymex contract, set to expire early next week, was down 4.1 cents to $2.207/MMBtu at around 8:45 a.m. ET. November was off 5.8 cents to $2.841. Natural gas rallied… 

   September 25, 2020

Sounds like they found a few more gopher holes to stuff.