Great points Larry!

Since trading in any day or series of days is based almost entirely on speculation by speculators that can cause major short term moves in one direction based on just minor information(when the fund type day traders take on a herd/mob mentality/pile on in the same direction), maybe they are still trading shut ins and the bearish mentality for a period of time.

As a guy who has followed/traded ng for 2 decades, you remember vividly in the old days that the threat of a major hurricane in the GOM(before exporting business existed) could cause incredible short term moves...........always to the upside when the threat of a major hurricane ramped up. 

This was mostly because it was during the time before fracking and most of the production came from the GOM back then. 

With just a few exceptions, those that featured notable structural damage to the facilities in the GOM, the price would come back to earth after the hurricane passed. 

I know that when I see a hurricane threat, like this last one, I still think of shut ins before anything else from remembering the old days.

I'm sure that  you vividly remember this one in 2008. I think I remember you keeping us posted on changes in shut in production for months:

Hurricane Ike News and Projections

https://www.rigzone.com/news/hurricanes/ike.asp

Thanks for starting a new ng thread Larry!

Previous post on natural gas:

                NG 9/27            

                            48 responses |              

                Started by MarkB - Sept. 28, 2020, 12:21 a.m.            https://www.marketforum.com/forum/topic/59561/

I'll try to add some fundamental stuff to this thread shortly. 

NGI after the close on Wednesday:

LNG Recovery Doubts, Warmer Weather Drag Natural Gas Futures Prices 20-Plus Cents Lower

Natural gas futures tanked Wednesday as news of a sunken barge in the Calcasieu Ship Channel squashed hopes for a quick resumption in full exports from the Cameron liquefied natural gas (LNG) facility. Another warmer shift in the latest weather data and higher production also worked in favor of bears. The November Nymex contract settled… 

   October 14, 2020

NG rig count barely above record lows still.

https://ycharts.com/indicators/us_gas_rotary_rigs

There are 2 natural gas seasonal graphs below.

The top one is very updated....1999-2019.  The one below that is thru 10 years ago, 1991-2009. 

They are almost identical thru early August............then really deviate tremendously!

What are some things we might learn from this? I would appreciate Larry and others chiming in with views.

1.  Spring is an extraordinarily strong time frame for NG prices.......always has been. Something like 19 out of 20 years up for some embedded time frames.

2. Despite it being so dependable, in 2020 COVID caused the opposite to happen in unprecedented fashion. 

3. Late June, thru July is the weakest period of the year historically. We started that period this year, with near record heat and CDD's being added to the weather forecast making it MORE bullish than the seasonal pressure.

4. That support gave way in early/mid July with the heat dialed in and the forecasts cooling off.

5. The August seasonal has apparently changed in the last 10 years. Used to be very weak and a continuation of the weak July(maybe it was hurricane premium coming out, when most of the production was coming from the Gulf).  The more recent seasonal is nuetral for August. 

6. Then, we have both graphs lining up together with Sept and Oct being very strong months historically. 

7. Then, we have huge divergence which is very surprising to me based on what I "thought" which might be a bias. 

I always remember November as being my most profitable month in the 1990's and it was always picking the October high and being short in November. I remember lots of Halloweens, trick or treating with the kids and having an especially fun time checking price quotes on the short positions.  However, we had some very mild Novembers in the late 1990's too. ...so it makes sense.2 The 2009 seasonal shows that. However, the 2019 seasonal shows the complete opposite. The biggest difference of the year between these 2 graphs. November from the 2019 graph actually has the greatest % increase of any month. WOW!

Before commenting more, I will still  need to look at HDD data for November to see if the Novembers from 2010-2019 were that much colder than the Novembers from 1991-1999 that they replaced on the 20 year chart. Memory tells me yes. Recent Halloweens for me......now trick or treating with the GRAND kids have featured everybody bundled up. Last Thanksgiving featured some major cold. 

https://charts.equityclock.com/natural-gas-futures-ng-seasonal-chart  

2000-2019 seasonal below

http://www.equityclock.com/charts/natural-gas-futures-ng-seasonal-chart/

The above chart represents the seasonality for Natural Gas Futures (NG) Continuous Contract for the past 19 years.

• Date range: January 1, 1991 to December 31, 2009 
• Type: Commodity Futures – US 
• Symbol: NG 

Any comments are appreciated.

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

Last week:  Actual75B   Forecast73B     Previous76B    

U.S. Natural Gas Storage

  ‹ See All Natural Gas Reports

Weekly Natural Gas Storage Report

 for week ending October 2, 2020   |  Released: October 8, 2020 at 10:30 a.m.   |  Next Release: October 15, 2020 

          +75 BCF........an initial small spike higher says a bit bullish but it was close to the average guess, even a bit higher.                                                                                                                                                                                                                                                                                                                                                                                                                   

Summary

Working gas in storage was 3,831 Bcf as of Friday, October 2, 2020, according to EIA estimates. This represents  a net increase of 75 Bcf from the previous week. Stocks were 444 Bcf higher than last year at this time and 394 Bcf above the five-year average of 3,437 Bcf. At 3,831 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.

7 day temps for tomorrow's EIA report. Chilly East, Very Warm West. 

         Temperature forecasts will determine to a large extent where we go from here and any technical formations on the charts can quickly be obliterated if the weather pattern shifts to something different than what the market traded the previous day(s).

However, this one described below, from Sunday/Monday was unusually powerful for signaling  trading on Tuesday/Wednesday and unless the weather turns colder again, it will be tough for natural gas to negate this gap and crap, meaning that the highs might be in. 

Turning colder and negating the gap and crap formation is very possible though and I am no way predicting that the highs are in. 

  Re: Re: Re: NG 9/27            

                          By metmike - Oct. 12, 2020, 10:32 p.m.            

            LNG Demand Recovery Spurs Double-Digit Gain for Natural Gas Futures Prices; Cash Surges Too

With Gulf Coast liquefied natural gas (LNG) facilities unscathed by Hurricane Delta, export demand’s quick rebound combined with a chillier forecast to send natural gas futures sharply higher Monday. The November Nymex gas futures contract jumped 14.0 cents to settle at $2.881. December climbed 6.7 cents to $3.271. Spot gas prices also posted stout increases… 

"metmike(from 2 days ago): While the above could also be a big factor, temps moderating in week 2, especially on the European model caused us to completely fill the huge gap higher from Sunday evening's open.

Huge gaps higher are very bullish but when they get filled 24 hours later, they are the complete opposite............exhaustion gaps(gap and crap)

 GAP AND CRAP TECHNICAL FORMATION DEFINED

Breakaway upside gap from the previous day that gets filled quickly.

This is a potentially very negative, buying exhaustion price formation. Initially, the market gaps above the previous days high on the next days open, leaving a gap in prices that were never traded between those previous days highs and the new days lows. This happens because of some powerful force affecting market/trader mentality while the market was closed that caused the bulls to get much more aggressive with buy orders and bears to pull back or be overwhelmed with BUY orders ABOVE the previous days high.

When that gap is open, it is often a breakaway gap, signaling even higher prices as the new force that caused it remains. If that gap is filled and prices return to the previous, lower range, it can be quite bearish...........usually only happens when the bullish force pushing the buying goes away. At that point, the exuberant buying has been exhausted and everybody buying on the most bullish news yet, has bought already and there's nobody left to keep buying and sellers actually have to push the market lower to attract buyers at lower prices.............BELOW the gap. "

All the  0z models were colder in week 2, especially late.

Pretty bullish.

Prospect of Rising Sabine Pass Volumes Boosts Natural Gas Futures Early

After a steep sell-off in the previous session, natural gas futures recovered a large chunk of their recent losses in early trading Thursday on the prospect of further increases in export demand. The November Nymex contract was up 12.9 cents to $2.765/MMBtu at around 8:40 a.m. ET. Analysts at EBW Analytics Group attributed the gains… 

   October 15, 2020

metmike: The main/real reason is colder temps on the overnight models.

Weekly Natural Gas Storage Report

 for week ending October 9, 2020   |  Released: October 15, 2020 at 10:30 a.m.   |  Next Release: October 22, 2020 

    +46 BCF   Bullish                                                                                                             

Summary

Working gas in storage was 3,877 Bcf as of Friday, October 9, 2020, according to EIA estimates. This represents  a net increase of 46 Bcf from the previous week. Stocks were 388 Bcf higher than last year at this time and 353 Bcf above the five-year average of 3,524 Bcf. At 3,877 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.

      U.S. Natural Gas Storage          Latest Release   Oct 15, 2020   Actual46B   Forecast55B     Previous75B                                                                                                                                                     https://www.investing.com/economic-calendar/natural-gas-storage-386                                                                                                                                                                                                                             

 Post EIA report comment

Natural Gas Futures Trim Early Gains Despite Sharply Lower-Than-Expected Storage Build

The Energy Information Administration (EIA) reported a surprising low-side 46 Bcf injection into natural gas storage inventories for the week ending Oct. 9. The EIA figure was around 10 Bcf below consensus, and Nymex futures, which surged early Thursday, climbed another couple of notches. The November contract was trading at $2.792/MMBtu in the minutes leading… 

End of Day comment

Story of the day 

 

Natural Gas Futures Rebound on Tight EIA Data, LNG Optimism

Natural gas futures quickly bounced back from the prior day’s nosedive as traders were hopeful Gulf Coast exports would soon resume full operations after a barge sunk near a key export terminal. Buoyed further by the latest government storage data, the November futures contract jumped 13.9 cents to $2.775/MMBtu. December climbed 7.2 cents to $3.261.…   By Leticia GonzalesOctober 15, 2020

metmike: The closing price was lower than the price just before the release of the EIA data. Temps/models overnight turned colder in week 2 and maintained during the day......the main reason for the sharply higher prices.

edit: I take that back, morning 12z models were not as cold as the overnight models after looking more closely. This actually explains why we closed lower than the price earlier in the day when the market was trading the colder 0z model solutions............even after being fed a pretty bullish EIA number at 9:30am.

Friday Morning early:

Balances ‘Very Tight’ as Colder Forecast Helps Propel Natural Gas Futures Early

Against the backdrop of a tight supply/demand balance, a colder-trending temperature outlook for later this month helped lift natural gas futures several cents in early trading Friday. The November Nymex contract was up 5.1 cents to $2.826/MMBtu at around 8:40 a.m. ET. The latest forecast early Friday from Bespoke Weather Services shifted colder toward the… 

metmike: The 0Z GFS Ensemble was pretty cold but was followed by a 6z run that was quite a bit milder.

Natural Gas Futures Called Lower Amid ‘Complicated’ Forecast, Unclear Outlook for Cameron LNG

As traders tried to decipher a “murky” outlook for the timing of restored export volumes out of the Gulf Coast, natural gas futures were down several cents in early trading Monday. The November Nymex contract was off 5.0 cents to $2.723/MMBtu at around 8:50 a.m. ET. Analysts at EBW Analytics Group attributed heavy selling in… 

   October 19, 2020

metmike: The last run of the GFS ensemble, 6z run was quite a bit cooler.

16 Rigs operating and I have 1

From the Directors cut:  

https://www.dmr.nd.gov/oilgas/directorscut/directorscut-2020-10-16.pdf

Oil Production

July 32,304,503barrels = 1,042,081barrels/day (final)

August 36,097,400 barrels= 1,164,432barrels/day (all-time high1,519,037 BOPD Nov 2019)

+11.74% prev mth

Natural Gas Production:

July Production 71,376,125MCF = 2,302,456MCF/dayGas Captured: 91%65,066,290 MCF = 2,243,665MCF/day

August Production 81,506,344MCF = 2,629,237 MCF/day(all-time high3,145,172 MCFD Nov 2019)Gas Captured: 92%74,918,999 MCF = 2,416,742 MCF/day(all-time high 2,899,998 MCFD Mar 2020

+14.91% prev mth

Coming back however slower than expected. 

Wellhead price     ~$31/Bbl

Natural gas              $1.53/Mcf

Thanks very much Joe!

NG prices have had quite a reversal since Sunday evening..+2,000/contact. 

In fact, we put in a small gap(down) and crap formation on the open.  The opening gap lower was filled so quickly that it didn't appear to be a huge deal at the time but the follow thru today, with prices now sharply higher, suggests that it indicated a selling exhaustion. 

NG comment from Monday close:

From Tuesday early:

Markets 

LNG Flows Said Poised to ‘Ramp Up Rapidly’ as November Natural Gas Rallies

With developments along the Louisiana coast appearing favorable for a ramp-up in export demand, natural gas futures surged in early trading Tuesday. The November Nymex contract was up 11.4 cents to $2.909/MMBtu at around 8:40 a.m. ET. Liquefied natural gas (LNG) feed gas demand climbed to 8.5 Bcf/d in early morning estimates from Bespoke Weather… 

   October 20, 2020

metmike: Temp forecasts for HDD have clearly gotten more bullish the last 24 hours, thru overnight but may not be able to keep us going higher, if the late week 2 maps showing a pattern change to  moderation don't change.

With time, as that period gets closer, that extended period moves up and replaces previous days (colder days) and the new extended forecasts, if they are milder with the new pattern because quite bearish. 

Story of the day 

 

Natural Gas Traders Jump on Positive LNG News, Cooler Weather Outlooks; Cash Strengthens

Natural gas futures rallied Tuesday on news that full liquefied natural gas (LNG) exports could soon resume from two key Gulf Coast facilities. An increasingly chilly weather forecast solidified the momentum, with the November Nymex gas futures contract soaring 11.8 cents to settle at $2.913. December slipped 2.0 cents to $3.260. Spot gas also jumped…   By Leticia GonzalesOctober 20, 2020

metmike: Overnight models colder by late morning/early afternoon models milder and putting some pressure on ng prices, which closed well off their highs, though quite a bit higher on the day.

If models continue milder, we could be close to or have seen a top.

Natural Gas Futures Rally Above $3 Early on Colder Trends, ‘Increasingly Bullish’ Balances

A cooler shift in the weather outlook overnight, coupled with indications of a tightening supply/demand as winter approaches, had natural gas futures charging higher in early trading Wednesday. The November Nymex contract was up 11.5 cents to $3.028/MMBtu at around 8:40 a.m. ET. NatGasWeather attributed the gains early Wednesday to a combination of a strengthening… 

   October 21, 2020

metmike: After a milder run on Tuesday late morning/early afternoon, models turned colder again, especially overnight.

However, the AO and NAO are going positive and it looks like a pattern change to much milder during week 2, so the weather is threatening to turn bearish and the source of cold will run out. 

Natural Gas Punches Through $3.00 as LNG Demand Reaches Fresh High; Traders Expecting Small Storage Build

Natural gas traders may have had the theme of 1980s sitcom “Three’s Company” playing in their heads Wednesday as they knocked on the door of $3.00/MMBtu gas. With the resumption of maximum exports imminent and weather models adding more demand, they got the job done. The November Nymex futures contract settled 11.0 cents higher at… 

By Leticia Gonzales

October 21, 2020

Weekly Natural Gas Storage Report

 for week ending October 16, 2020   |  Released: October 22, 2020 at 10:30 a.m.   |  Next Release: October 29, 2020 

                                                                                                                                                                                             +49 BCF                                                                                        

Summary

Working gas in storage was 3,926 Bcf as of Friday, October 16, 2020, according to EIA estimates. This represents  a net increase of 49 Bcf from the previous week. Stocks were 345 Bcf higher than last year at this time and 327 Bcf above the five-year average of 3,599 Bcf. At 3,926 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.

Natural Gas Slips, Still Maintains $3 Handle as EIA Storage Print Reflects Tightening Balances

After gaining 25 cents in the past three sessions, natural gas futures took a breather Thursday. The November Nymex gas futures contract settled at $3.007, down 1.6 cents day/day. December, however, fell a sharper 7.6 cents to $3.272, and similar declines were seen through the remaining winter contracts. Spot gas prices were mostly higher, but… 

By Leticia Gonzales

October 22, 2020

metmike: Extended maps turning milder

metmike: Natural gas weather continues to turn more bearish. The European model overnight was much more bearish.

November ng expires next week which could provide some prices spikes, especially this time of year. 

+++++++++++++++++++++

Markets 

Weather Outlook Sheds Heating Demand as Natural Gas Futures Slide Early

A milder shift in the latest forecasts saw natural gas futures give back some of their recent gains in early trading Friday. After cresting the $3/MMBtu mark earlier in the week, the November Nymex contract was down 3.5 cents to $2.972/MMBtu at around 8:45 a.m. ET. In the overnight weather data, the European model removed… 

   October 23, 2020

We now have a minimal hurricane forecast for the GOM in an area that will get some ng market attention.

The question is, "is it bearish or is it bullish?"

  Re: Re: Re: Re: Re: Re: Re: Tropics September 20, 2020 onward            

                            By metmike - Oct. 24, 2020, 11:07 p.m.            

Thanks much Larry!

Zeta is expected to become a minimal hurricane and take the path shown below.

https://www.nhc.noaa.gov/refresh/graphics_at3+shtml/024045.shtml?cone#contents

I was thinking that with November forecasts turning warmer and ng closing on its lows Friday, that we might gap lower on the open and it becoming a very bearish,  downside breakaway gap.

But this tropical system was predicted to be almost no threat to the natural gas industry in the GOM as of Friday afternoon and that has changed. 

There will likely be some shut ins, which is bullish as far as less production but also bearish affects on less exports.

15 years ago, production shut ins were entirely bullish since we didn't have much fracking production then and this change would cause higher prices briefly, until the hurricane past or after a brief spike higher dialed in any lost production.

15 years ago, we didn't have exports. That part of the equation in 2020 makes hurricanes in this location bearish from lost exporting. 

How do you think this will affect the market Larry? Others?

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

                By WxFollower - Oct. 24, 2020, 11:36 p.m.            

 Mike asked how do I think this storm will affect NG? I honestly have no idea. As I've said, its previous Gulf storm patterns have made little sense to me. 

+++++++++++++++++++++++++

                By WxFollower - Oct. 25, 2020, 3:04 a.m.            

Mike,

 I should also tell you that due to the current and projected very slow movement for the next day or so along with the real potential for a further south center relocation and the time of year, the uncertainties are much higher than normal. Therefore, the projected track may change greatly even by late tomorrow. If so, the threat to the N Gulf could go down. We'll see.

Here is a general discussion on the topic of hurricanes and ng prices:

Does the Atlantic Hurricane Season affect the Energy Market?

https://energywatch-inc.com/does-the-atlantic-hurricane-season-affect-the-energy-market/

These articles might be more relevant but they were MAJOR hurricanes and this one is expected to be minimal.

Weekly Natural Gas Prices Surge as Hurricane Delta Wreaks Havoc on Supply

https://www.naturalgasintel.com/weekly-natural-gas-prices-surge-as-hurricane-delta-wreaks-havoc-on-supply/

Oil and gas prices: What the one-two tropical storm punch in the Gulf means

https://www.cnn.com/2020/08/24/business/oil-gas-prices-tropical-storms/index.html

  Why Hurricane Dorian is lifting natural-gas prices

  Published: Aug. 29, 2019 at 3:09 p.m. ET

https://www.marketwatch.com/story/why-hurricane-dorian-is-lifting-natural-gas-prices-even-though-its-not-a-big-threat-to-output-2019-08-29

Hurricane Laura Causes Decrease in Oil, Natural Gas Prices

https://energywatch-inc.com/hurricane-laura-causes-decrease-in-oil-natural-gas-prices/

TOPIC PAGE: Hurricane Laura impact on energy markets

Author: ICIS Editorial

                2020/09/02

https://www.icis.com/explore/resources/news/2020/08/27/10545399/topic-page-hurricane-laura-impact-on-energy-markets

Natural Gas Price Fundamental Daily Forecast – Prices Could Spike Higher if Laura Becomes Category 3 Hurricane

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-prices-could-spike-higher-if-laura-becomes-category-3-hurricane-668627

Latest discussion of the potential minimal hurricane here(doesn't look too threatening at the moment):

https://www.marketforum.com/forum/topic/60064/

Here's an excellent article but this minimal hurricane is NOT going to have the same impact.

U.S. energy exports severely disrupted by Hurricane Laura

https://www.reuters.com/article/us-storm-laura-lng/u-s-energy-exports-severely-disrupted-by-hurricane-laura-idUSKBN25O0AP

Loadings of LNG cargoes from the United States have also been delayed.

LNG exports were on track to fall to 2.1 billion cubic feet per day (bcfd) on Thursday, their lowest since February 2019, according to data from Refinitiv. [NGA/]

“Given the direct hit on the Sabine Pass and Cameron LNG export terminals by Hurricane Laura, they will likely be the last terminals to restart exports in the Gulf,” analysts at ClipperData said in a note, referring to Cheniere Energy Inc’s Sabine Pass and Sempra Energy’s Cameron LNG export plants in Louisiana.

Both plants suspended operations earlier this week and said they would conduct damage assessments as soon as it was safe to do so.

metmike: The graphics above are cool but I'm not sure that they tell us that much.

I was hoping to stay short and still think that is the place to be but got out of my ngz shorts at 3.170 because of the hurricane threat.

It will amount to nothing big in the end but with November expiring this week and the hurricane threat and the uncertainty, have to be on the sidelines.

Before the hurricane threat, I expected a gap lower open this evening and that serving as a downside breakaway gap with a mild November crushing prices.......potentially.

However, we opened close to the 4pm close Fri, not a gap lower, traded up a bit, made new lows below Friday's low which held and have come back to higher.......actually, now we are really taking off to the upside............whew, glad to be out!

Interesting that the November is still lower but the December is up.

Looking like the temps in week 2 will be a little warmer than normal.

Local forecasters playing down the hurricane as probably just a tropical storm rain and wind event. Not going to be a threat to the coastal cities that have already been ravaged by 2 strong hurricanes. Maybe exports will be able to get back closer to normal.

OI for the november contract is already at the bottom. December is trading strong. Will be looking for a possible breakout down in the morning. 

I agree on the downside break out being inevitable if the pattern change to warmer happens and lasts into mid November.

Nov NG expires on Wednesday, so volume and OI is plummeting for the front month.

Markets 

Zeta Latest Storm to Target Gulf Coast as Natural Gas Futures Called Higher

Amid colder weekend weather trends and production impacts from another tropical cyclone tracking toward the Gulf of Mexico, natural gas futures gained in early trading Monday. The November Nymex contract was up 3.5 cents to $3.006/MMBtu at around 8:45 a.m. ET. An already active hurricane season for the Gulf Coast could soon get even worse,… 

   October 26, 2020

metmike: November NG expires on Wednesday.

European model was cooler/more HDD's overnight..........bullish but still changes the pattern to milder later in week 2, which will eventually crush NG prices if that defines the November pattern.

 I think a good portion of this is likely due to colder models since yesterday. The Euro ens is much colder than Fri also.

Regarding Zeta, that is a wild card as these storms have tended to be net neutral to bearish, not bullish. Now that we've left the main CDD season, it is likely no longer net bearish and I suppose it could even be slightly bullish depending on LNG export facilities.

Yes and the 12z GFS Ensemble was quite a bit colder too!

The week 2 warm up keeps getting pushed farther out.

Natural Gas Futures, Cash Back Above $3.00 as LNG Demand Reaches Fresh Highs 

Natural gas futures moved back above $3.00/MMBtu Monday as export demand reached fresh highs and weather models added back some previously lost demand for the 15-day period. With expiration looming later this week, the November Nymex contract climbed 5.3 cents to $3.024. December edged up 5.8 cents to $3.253. Spot gas prices surged at the… 

By Leticia Gonzales

October 26, 2020-Monday close

Natural Gas Steady as Zeta Approaches GOM, Overnight Weather Data Mixed

Natural gas futures were trading close to even early Tuesday as overnight weather trends were mixed and a tropical cyclone approaching the Gulf of Mexico (GOM) prompted further production declines. The November Nymex contract was trading 0.4 cents lower at $3.020/MMBtu at around 8:45 a.m. ET. December was down 1.8 cents to $3.235. Tropical Storm… 

   October 27, 2020

metmike: Week 2 continues to look like the big warm up...................but we keep adding HDD's and less warm up to the forecast. 12z GFS was the coldest yet of the past few days.........but still has the week 2 warm up.

Natural gas futures soared to a nearly two-year high for the second time this week, but the price spike had little to do with supply or demand. Instead, analysts said options trading and massive speculative positioning ahead of the November Nymex contract’s upcoming expiration factored into Tuesday’s price behavior. The prompt month went on to settle only a half-cent lower at $3.019. December climbed 5.8 cents to $3.311.

Spot gas prices were a mix of losers and gainers, including in the Permian Basin, where next-day gas soared above $3.00 as freezing weather took a toll on power and gas infrastructure. NGI’s Spot Gas National Avg. fell 5.0 cents to $2.940.

With expiration looming on Wednesday, futures struggled to move decisively in either direction at the start of Tuesday’s session. Prices opened slightly lower day/day at $3.016, dropped to a $2.986 intraday low and then rebounded to a $3.091 high.

“It is rare for a market to print a multi-year high the previous day, slide below a big whole number the next day, and then gather itself up and reverse higher,” said Mizuho Securities USA’s Robert Yawger, director of Energy Futures. “You have to wonder, who are the traders who buy these dips and continue to push higher?”

Yawger said Tuesday’s rally obviously was a “spec run phenomenon,” with Commodities Futures Trading Commission (CFTC) data indicating the combined IntercontinentalExchange/Nymex Henry Hub position is net long more than 500,000 contracts. To put it into context, “civilized contracts” such as gold sport a CFTC net long speculative position of 135,000 contacts, Yawger said. Crude oil was net long 332,000 contracts.

After gas posted a 25-year low of $1.432 on June 26, it didn’t take long for speculative traders to notice and start jumping in, according to Yawger. Gas then traded to a nine-month wave high of $2.473 on Aug. 28, a gain of 70.2% top to bottom, in two months and two days. Once these traders “pulled the plug” in the face of the massive storage overhang, prices pulled back to a wave low of $1.795 on Sept. 21. This triggered the latest running of the bulls. 

The “canary in the coal mine” is the March/April spread, according to Yawger. The so-called widowmaker March/April spread settled Tuesday at plus 27.4 cents, but it traded to a three-month low of 23.7 cents earlier in the session.

“March/April would not be trading at a three-month low if winter were looking to draw down on supply, or if it was going to be so cold that demand was going to turbocharge demand,” Yawger said. “Nobody is expecting either of those things to happen.” 

Prices are expected to remain volatile this week. EBW Analytics Group said although options and expiration are likely to bring about big swings at the front of the futures curve, Henry Hub cash prices are likely to stay above $3.00 This increases the odds that the November Nymex contract will go off the board Wednesday “at a price with a $3 handle.”

Zeta Watch

Fundamentals took a back seat in Tuesday’s price action, but there were some major developments on supply/demand balances.

First, production took a big hit as Hurricane Zeta continued churning in the Gulf of Mexico (GOM). In the 4 p.m. CT update, the National Hurricane Center (NHC) said Zeta, which made initial landfall on the Caribbean coast of the eastern Yucatan Peninsula late Monday, was packing maximum sustained winds near 65 mph with higher gusts. On the forecast track, the center should move over the central GOM Tuesday night and approach the northern Gulf Coast on Wednesday. The storm was projected to make landfall within the hurricane warning area from Morgan City, LA, to the Mississippi/Alabama border before moving inland across the southeastern United States early Thursday.

Producers began evacuating personnel from offshore platforms earlier in the week. Based on 38 reports filed with the Bureau of Safety and Environmental Enforcement (BSEE) before noon on Tuesday, 1.50 Bcf/d of natural gas, which is more than 55% of the total gas production in the GOM, had been shut-in. Close to one-half of the oil produced, or 914,811 b/d, also was shuttered.

Companies said they had evacuated personnel from 154 manned production platforms, about one-quarter of the total in operation, according to BSEE. In addition, personnel had been evacuated from three of the 10 nondynamically positioned rigs. Another nine of the 16 dynamically positioned rigs in the GOM were moved off location as a precaution ahead of Zeta’s projected path.

Genscape Inc. said dry gas production also declined further to 447 MMcf/d. Since Saturday, receipts have declined significantly on Destin Pipeline (down 200 MMcf/d), Nautilus Pipeline (down 257 MMcf/d), Transcontinental Gas Pipe Line (down 201 MMcf/d) and Discovery Gas Transmission (down 191 MMcf/d). Destin and Nautilus have issued notices related to Zeta and continued to evacuate nonessential personnel from their platforms, according to Genscape.

On the demand side, NGI data showed feed gas deliveries to U.S. liquefied natural gas (LNG) export terminals slipping more than 250,000 Mcf day/day to around 8.85 Bcf.

EBW pointed out that access to the Calcasieu Ship Channel was still restricted to vessels with no more than a 36-foot draft, preventing Cameron LNG from returning to normal operations. Over the past several days, several LNG tankers have been allowed to dock at the terminal and were partially loaded. To comply with the draft limitation, however, they were forced to depart partially laden. The Wilpride LNG vessel, meanwhile, has been forced to remain anchored in the GOM.

“As a result, LNG feed gas flows have been limited to 1.25 Bcf/d, at least 1 Bcf/d below maximum capacity if all three trains at Cameron operate at full capacity,” EBW said.

The U.S. Coast Guard has not indicated when restrictions may be lifted. A contractor was hired to remove the sunken barge limiting access, but a complete removal is not expected until mid-November.

“The Bayport Dredger, however, has been continuing to work in the area near the barge,” said EBW. “It is possible, therefore, that restrictions on access will be relaxed much sooner, potentially even this week.”

metmike: The 12z GFS ENS was cooler but NGZ was already above $3.3 before that came out. I had no idea that the spec community is net long 500,000 contracts of nat gas right now. They have obviously been loading up since the record low prices and record low rig counts happened earlier this Summer but that has to be a record by a wide margin. 

If we have a really mild Winter and they cover some of that position, there could be some extreme downside at times, especially with record high supplies right now.

They are probably in it for the long haul, well into next year or longer possibly but with those numbers, they could cover half that position and still be massively long and aggressively  selling 250,000 contracts of ng, if lets say they did that this Winter with mild weather would crush prices. 

There is no doubt, however that they are long out the whazoo because longer term fundamentals look quite bullish. 

The price for the almost expiring(tomorrow) NGX today was the highest for that contract in over 4 years.

Amazing when considering that storage is at record levels still.

Large spec activity has apparently taken over the trading for nat gas. However, contract expirations in the past during this time of year are noted for huge surprises, sometimes to the upside when fundamentals do not justify it.

If the warm up advertised in week 2, starts getting closer and is followed by a continuation of that pattern well into November, it would blow my mind to see ng prices not fall hard from here.

Warm Novembers almost always cause lower ng prices.

A Warm November with record storage would almost certainly cause this.

A Warm November with record storage and the highest price in years and huge specs being long 500,000 contracts is the recipe for a price collapse.

Put another way. Who the heck is going to  buy ng under those circumstances?

In the absence of big buyers, it requires the price to drop pretty far down to reach offsetting(size) buy orders to  satiate aggressive selling by large specs.

Markets 

November Natural Gas Expires Shy of $3 on Weather Uncertainty

Natural gas traders on Wednesday struggled with which side of the $3.00/MMBtu mark the prompt-month futures contract should roll off the board. With an uncertain weather outlook weighing heavily on the market, the November Nymex contract expired 2.3 cents lower at $2.996. December, which moves to the front of the curve on Thursday, fell 2.0… 

   October 28, 2020

metmike: Insane day for ng.

Down almost $1,500/contract, then after a bullish EIA report came roaring back to finish higher.

Normally, this time of year, if the outlook for November is mild, natural gas is under big selling pressure. Especially with near record ng in storage right now we would expect that.

With large specs being long 500,000 contracts right now, the selling ammo could be huge.  Very early this morning, the European model came out milder and we got a sample of that, I believe.

Had the guidance and forecasts after that continued to warm things up in November, we could have continued lower and even after the bullish EIA report, would have struggled.

However, much of the guidance has been suggesting a pattern change later in week 2 that will feature a -AO, -NAO and building upper level ridge off the Pacific Coast to around Alaska.

This suggests that it could turn much colder, starting in the West to Upper Midwest, then possibly shifting farther east.

The bullish part of this is that its meridional flow(north to south). It means cold air in the high latitudes is transported to the mid latitudes.

Where that flow is aimed is very important. The farther east it hits, the more bullish it is.

If an upper level ridge builds in the East and keeps it mild there, then its not so bullish.

This is in contract to zonal, west to east flow, which is almost always bearish because it keeps all the cold locked up to the north with no change to hit anywhere.

Markets 

EIA Storage Report Gives Treats, Not Tricks, to Natural Gas Bulls; Cash Creeps Lower

Natural gas traders waking up with any neck pain on Friday may have a case of whiplash after Thursday’s wild ride in the futures market. The December Nymex contract, on the first day in the prompt-month position, plunged early to a $3.151 intraday low before screaming back higher to settle at $3.301, up a penny… 

   October 29, 2020

 Thanks, Mike as always!

 Due to this now being too long for scrolling easily, I'm starting a new NG thread here with a copy of Mike's excellent recent post:

https://marketforum.com/forum/topic/60537/