What the heck Larry, the previous thread only had 76 posts in it (-:

Thanks much!

Here is the old thread:

                NG 12/8/20-12/17/20            

                            76 responses |                

                Started by WxFollower - Dec. 8, 2020, 9:14 p.m.            

                 https://www.marketforum.com/forum/topic/62430/

 Please continue NG posts here. Thanks.

I'll update this one later:

EE was colder!

One issue that may be bothering the bulls is that on Monday, we had a big frigid blast coming in week 3 that was being well advertised in the news,  stays in Canada now.

I wouldn't be surprised if it gets down here though.

12Z Euro and EE, like the 12Z GEFS, also significantly colder. Oh, and the EE is also colder late in its run, a key metric that Mike likes to harp on And yet, NG is still hanging down ~3 cents down at least for now. And this with a slightly bullish EIA. So, to his point of today imo, wx changes have not been the primary mover. And neither could it be today's EIA. Something is holding it down and it may not make much sense.

Edit: Now finally rising in what may be a pretty delayed reaction, which sometimes also happens.

Regardless of what it does from this point onward, I feel it is safe to say that wx changes have not at all to this point been the primary mover today. Otherwise with a slightly bullish EIA and colder wx models, it would have been up for the day, not down since the EIA.

Not sure why you are calling the EIA report as bullish for the market.

At 9:30 am, when the EIA number was released, the market was trading at 2.701. 

After the release, it immediately went straight down, spiking to 2.641 within seconds, then 30 minutes later was trading way down at 2.607,  at 10:01 am, almost 1,000/contract lower based exclusively on the markets reaction to the report. This is VERY bearish.

Weather models that came out since then have been a bit more bullish. This is why the last price is back up to 2.659 at 2:02pm.

Call it what you want but those are the times and those are the prices, correlating with the news and weather.

We've recovered over half of the losses from the bearish spike down after the release of the EIA report,

and are now back up to 2.661 from the colder 12z models. 

Not sure where we go from here as most of the stuff must be mostly dialed in. 

The 500 mb map below has a potential Greenland Block forming at the end of 2 weeks. 

This is pretty far out and the models have been extremely unstable lately for this time frame but a strong positive anomaly around Greenland and negative anomalies in the US is usually favorable for cold along the East Coast.

There are some other factors that favor the cold along the East Coast too.

But to really get the NG to move, its going to be tough if most of the models have so much warmth in the midsection.

This graph of the AO tells us how uncertain and divergent some of the solutions are at the end of 2 weeks.

Anywhere between +2 and -4.  That's an incredible spread!

Mike,

Edit: holy cow, you added a lot since I read the post I'm now responding to. 

-----------------------------------------------------------------------------------

 Indeed, when you look at it like that, I can see why you are saying that about the EIA.  Different perspectives again between us. Nothing wrong with that! 

 Here's my thinking about the EIA and why I don't look at it as bearish  When I say that the EIA was slightly bullish, I mean vs average guesses, which were only in the -119 to -120 range. So, to me, there's nothing bearish about the -122, itself. Also, trust me when I say that a -122 bcf on only 164 HDD is solidly bullish vs past years. More often than not, something at or near 164 HDD would result in a sub 100 EIA draw. 

 So, in summary, there's nothing about today's -122 that says bearish to me. Remember, different perspectives for different folks.

  So, you may ask me why would NG go down so much after it was released if it wasn't bearish? This has happened a lot with NG in recent years. What sometimes happens with NG is that there are new orders that are planned in advance of the EIA, but which are not actually placed until just after the EIA is released because they hold off so that they don't  take the chance on being in the market during its release. These are people who prefer to be flat during its release. In this case, it appears that there were a bunch of new short orders that were preplanned to be placed just after the release that had nothing to do with the EIA. Because it was expected to be a relatively large draw for early Dec, they were afraid to place these shorts until just AFTER the release.

 I still don't agree with you and will reiterate that I feel very strongly that wx changes did NOT dominate trading today. Only recently and this is a good bit after the model finished, it appears that the 12Z EE may have finally got the market to move up a good bit.

  Different perspectives!

12/17 10:23a CST  DJ Natural Gas Slides As Storage Remains High -- Market Talk 
 
  11:23 ET - Natural gas prices slide as the EIA's weekly report shows storage 
levels higher than average amid expectations of mild weather leading to weak 
demand. The EIA says storage declined by 122B cubic feet last week, steeper 
than the 91 bcf reduction reported a week earlier and also more than the 119 
bcf decline forecast in a WSJ survey.

Thanks much Larry,

edit: OK, I misinterpreted your first point initially on market short orders placed after the report because they were afraid that the number would be real big and cause a spike higher.

This is actually agreeing with me.  It was based on their reaction AFTER WAITING TO SEE THE NUMBER. This is what I'm saying. These orders, in addition to all the other orders were the markets reaction to the seeing of the number.

There is no better way to determine what the market thinks vs the markets expectations...............watch its reaction after the release of news. There can be a buy the rumor, sell the fact affect many times and probably that had some  impact here too. 

This is where so many traders get hung up on what the number means to them or their service or the news reporting agencies and what it should mean to the market based on what makes sense. The market tells us, sometimes clearly based on it putting the money where everyone;'s mouth is. 

The DJ said that the market expected 119, instead of 122.  That is based on what a group of traders/experts SAID before hand and people site as the metric to tell us whether this was bullish or bearish...........but its based on OLD news of what traders thought the market was expecting by a bunch of experts BEFORE the release.  The new news that trumps that is what traders ACTUALLY THOUGHT based on their live reaction AFTER the release. 

The market went down 1,000/contract for the 30 minutes after the release tells us the estimates, underestimated what the market was really thinking...............the expert guesses before hand are  misguidedly used to tell us what the market thought........it was just expert guesses. I can't tell you how many times this has misled people. 

If they were honest, these news services would add that fact afterwards instead of continuing to site their bad guess before hand as the definitive market metric.

This is not my opinion Larry, it's the markets. I'm only reporting what the market did/does, not what I or others think that it should do or should have done. 

This sort of reminds me of a story.

On Feb. 5 in the 1990's(don't remember the year) but it was my birthday present that year from the market, we had a moderate freeze in FL that morning.

The news reports were showing a bunch of pictures of the oranges with icicles on them and telling us about how bad it was and how much supplies would be cut and acted like it was much worse than anybody expected...........but they were flummoxed by the fact that oj futures were limit down. 

How could this happen on such bullish news and the news agencies in previous days not telling us that this was coming?

It was easy. I got out of my longs on the close the day before.....on the highs because the market had been telling us for a week that it thought a freeze was coming. I wasn't going to stick around for the actual  bullish news that surprised everybody reporting the news (but not the traders in the market) because the market expected that freeze.

Once it happened..............the buy the rumor..............turns into sell the fact. 

Unless of course, the freeze was even worse than "the rumor" then, there would be more buying.

But it wasn't worse, so the spec longs on the freeze covered by selling and so did others.

Bearish reaction to what everybody thought was bullish news. But most of the traders selling that day(those in the market) would not have been selling if they thought it was bullish news. They were either taking profits(selling the fact) or had waited for after the freeze event to get short/sell after it was not worse than they though it could be.

OJ is a very thinly traded market, so reactions can go to an extreme like this sometimes.

So one can hardly refer to a freeze in FL that damages the orange crop and reduces supply as bearish. 

But the markets reaction by going limit down, told us that compared to market expectations, it must have been bearish.

Turns out, that weeks later, there wasn't as much damage to the crop as expected but it still was not a bearish event. Regardless, the market told us what it thought about the event immediately after it happened.

Sort of related:

People like to say that the market is always right but thats only at any one point in time. 

Since the price is always changing, I think its more like the market is always wrong.  A speculator can make money if they know what the price SHOULD BE TOMORROW........after the market corrects todays wrong price. 

Story of the day  

EIA’s 122 Bcf Withdrawal Not Supportive Enough as Natural Gas Futures Slide

The Energy Information Administration (EIA) reported a “pretty bullish” 122 Bcf withdrawal from storage inventories for the week ending Dec. 11, in line with market expectations ahead of the report. After briefly slipping into the red early Thursday, the January Nymex gas futures contract was trading a couple of cents higher at around $2.700/MMBtu in…   By Leticia GonzalesDecember 17, 2020

Larry, 

I think that you will agree with me that this person has made a blatant mistake." After briefly slipping into the red early Thursday, the January Nymex gas futures contract was trading a couple of cents higher at around $2.700/MMBtu"

This is completely wrong and I think they accidentally incorporated the early morning report in here. After the release of the EIA report prices never got close to being in the black.

It just reminds me again,  that many of these reporters are not actually traders themselves. 

https://www.marketforum.com/forum/topic/62890/#62896

Addition: They corrected the mistake, as shown below.

Jim,

Thanks for chiming in earlier on the previous thread with some outstanding points and information. 

Mike,

 Please read carefully what I said about the EIA. Folks wanted to establish new shorts but they didn't want to do it until the EIA was released. They had already decided to do it regardless of what the EIA showed. It was sort of a sell after the bullish news. I'm sure you're familiar with the idea of selling after bullish news is released or buying after bearish news is out. 

Exactly Larry! As I mentioned before, we agree on this. 

Maybe I didn't explain that well.

Because they were EXPECTING the EIA to be bullish........more bullish than the numbers out there.

Otherwise, they likely would have sold before hand. 

And you are just speculating on a specific trader who makes up an X amount(minority) of trade thinking to explain what happened after the release of the number.

I am using, what the Wycoff trading principle describes as "The Composite Man".

The entire market itself with all traders combined. 

And the bottom line is it doesn't even matter much because the 7 days used for that report were a week ago. ......ancient history for ng prices.  It can suggest how tight the demand/supply balance is............and I think its pretty bullish right now, with this report confirming that even more.........but the market does too apparently after today's reaction. 

I think we can add to the bullishness with the current weather pattern, -AO being under appreciated by models.

The 18z GFS products were colder and so we see ng having another bounce higher after that.

Somebody must have pointed out the reporters wrong description about how todays trading went and she fixed/corrected it:

https://www.marketforum.com/forum/topic/62890/#62906

Markets  

Natural Gas Futures Slip After EIA Data Fails to Sway Traders; Northeast Cash Mixed as Snowstorm Exits

Even with the East Coast buried under several feet of snow, and the potential for more frigid air to arrive by Christmas, natural gas futures fell short Thursday. The January Nymex gas futures contract settled 4.1 cents lower day/day at $2.636/MMBtu after the latest government storage report came in bullish, “just not record bullish.” Spot… 

The 12z ensembles from both the GFS and Euopean were COLDER!

This is why natural gas popped towards the end of the day session and is near the highs right now.

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

U.S. Natural Gas Storage

           Latest Release  Dec 17, 2020  Actual-122B  Forecast-120B  Previous-91B    

http://ir.eia.gov/ngs/ngs.html

Weekly Natural Gas Storage Report

 for week ending December 11, 2020   |  Released: December 17, 2020 at 10:30 a.m.   |  Next Release: December 23, 2020 

                                                                                                                                                                                  -122 BCF                                                                                                                                                     

Summary

Working gas in storage was 3,726 Bcf as of Friday, December 11, 2020, according to EIA estimates. This represents  a net decrease of 122 Bcf from the previous week. Stocks were 284 Bcf higher than last year at this time and 243 Bcf above the five-year average of 3,483 Bcf. At 3,726 Bcf, total working gas is  within the five-year historical range.

 For information on sampling error in this report, see Estimated Measures of Sampling Variability table below. 

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

7 day period used for yesterdays EIA report. Very mild NorthCentral!

https://ycharts.com/indicators/us_gas_rotary_rigs

Rig count was up 2 and back up to the record low of 81 from August 2016

January Natural Gas Futures Climb After Winter Freeze, Inventory Decline; Cash Prices Lose Luster

The last 2 runs of the GFS ensemble have subtracted more HDD's from 2 consecutive Ensemble  runs then I can remember. I'm sure it's happened numerous times before but I just don't remember it. -13 HDD on the last run after -7 HDD's on the 18z run vs the 12z run late this morning............The 12z run was actually +12 HDD's and helped the market to finish strong.

The last 0z run had 310 HDD's which is the lowest number since around last Saturday's 18z run. If were were trading right now, NG would be sharply lower. 

The European model is also much milder. 

Despite this, the cold biased Canadian model is still looking pretty chilly (colder than the run 12 hours ago) at the end of 2 weeks. 

There is a huge disparity because Canada will have some frigid air in place, while much of the US has mild temps. Quite a horizontal temperature gradient with changing latitude. Slight changes in the flow pattern and shift north or south in the temperature bands  will mean a huge change in temperatures for some locations.

This last EE, is 10 HDD's warmer than the 12z Friday run. 

We have to go back almost a week to find consecutive runs that were warmer than that. 

And the last 2 runs of the GFS products have now completely flipped to MUCH colder!!

The last run of the 12 GFS Ens is now tied with yesterday;s 12z run as the coldest one yet.  The 6z run, 6 hours ago really is the one that reversed colder. 

I will guess that the EE will also come in colder.

Update: EE was +4 HDD, so still quite a bit milder than the colder/builish 12z Friday solution, 24 hours ago. 

Mike,

 Here are the comparisons that I have tallied:

1. 12Z today vs 12Z Fri: GEFS +4 HDD and EPS -2

 So, pretty neutral overall. To me, this is the most relevant comparison because it compares what the NG market was last trading on Fri PM vs what it will see at the open as regards the last complete run 

2. 0Z today vs 0Z Fri: GEFS wash and EPS -4

 So, neutral to very slightly bearish.

3. 12Z today vs 0Z Fri: this will obviously be more bullish than 12Z today vs 12Z Fri because 12Z Fri vs 0Z Fri was bullish with both of Fri at 12Z having a good number more HDDs vs Fri at 0Z:

GEFS +9 and EPS +5

 I'm my usual flat as a pancake self, my favorite position.

Thanks much Larry,

I'm tied up with the grandkids doing Christmasy stuff but will comment more later this evening.

We opened higher on the slightly colder forecast on the GFS and an extremely impressive  --AO with unbelievable spread, with all solutions negative.. as well as a -NAO. Those indices say there is a potential for the models/forecasts to turn much colder but the actual pattern could be one that could is very mild.

Huge uncertainty!

We could go hard in either direction from here because just a small change in the location of the main weather features in week 2 will make a massive difference in temps. 

Heating oil got hit right after the open.

 "there is a potential for the models/forecasts to turn much colder but the actual pattern could be one that could is very mild. Huge uncertainty!"

Weathermen!  Two faced, 2 sided, forked tongue, wishy washy, double talking, need I say more? Anyone agree with me?  Bet Vandy does.  Bring back Vandy for the New Year.  What, a life sentence?  Pardon him and Assange!!!C'mon Man!!!

Oh heck... I'll buy a NGG21 right here at 2.664

What can go wrong?  Dialed in?  NooN Maps, Solar Min, Jupiter and Saturn, Martial Law

Trump stays Prez, Natty celebrates, too.

Natural Gas Futures Down Despite Cooler Forecasts Amid Renewed Virus Fears

blue waves in dashboard GFS . Bears are on BBQ

http://ir.eia.gov/ngs/schedule.html

Thanks VERY much hayman!

I didn't realize that the EIA report was coming out a day early this week. 

Here are the temperatures for the period doing into that report. The drawdown will be larger than the previous one  but maybe Larry has some early estimates.

Euro now showing more blue than red, added almost 3 HDDs from last run, overall now bullish by almost 4.....

hayman,

What the heck! That's exactly right!  I didn't know that you were following the European model. The 12z  GFS ensemble was around 2.5 warmer than its previous run. 

Orrr, is that you WxFollower, pretending to be hayman (-:

You are right on top of it today! Thanks for sharing.  Good trade so far on your NGG21

I liked your comment on weathermen earlier.

When I first started on tv(11 years as chief meteorologist at WEHT) people would make all sorts of weatherman jokes and it bothered me a bit.

Stuff like "What other job would let you be wrong half the time and not get fired!" So I might try to explain to them what the scientific justifications are for  us being wrong to deaf ears.

Then...........

I learned to have fun with it(if you can't beat em........join em).

If some guy in a crowd would holler out "Hey weatherman!! What's the weather going to be like?"...... Before he could deliver the punch line to his joke, I would holler back...... "Why did you ask me? You know I'm a weatherman and will just lie to you!!"

Stole his THUNDER.

Mike,

 Last EIA week had 188 hdd vs 164 the prior week. That means I'm expecting at least a draw in the 150s.

Thanks very much Larry!

NGI after the close:

Natural Gas Futures Down Despite Cooler Forecasts Amid Renewed Virus Fears

Amid renewed economic concerns over the coronavirus, natural gas futures eased lower early Monday even as the latest forecasts leaned colder. The January Nymex contract was off 2.4 cents to $2.676/MMBtu at around 8:50 a.m. ET. Despite colder trends in forecasts over the weekend, natural gas prices appeared to be dragged lower early Monday by… 

   December 21, 202

https://seekingalpha.com/article/4395716-natural-gas-bullish-weather-scenario-is-developing

https://www.youtube.com/watch?v=XEElB5UTv-4&feature=youtu.be

https://www.youtube.com/watch?v=SbeiiKoK7ek

NG was clearly down earlier in yesterday’s session due to a drop in equities imo. Also, oil dripping sharply may have also been an influence. This happened despite wx overall not being bearish.

https://www.investing.com/analysis/natural-gas-last-bullish-move-200548471

Interesting points hayman!

I've been pointing out the very strongly negative AO for weeks now and actually posted it twice in just this thread.

Noted the potential Greenland block for weeks too but so far......no polar vortex collapsing south in the direction of the mid latitudes, other than some of the cold biased Canadian model solutions.

But the potential is there with this pattern:

Headlines Tue earlier:

Weather Data Maintains Late December, Early January Cold as Natural Gas Futures Rise

Colder trends from the European weather model overnight helped lift natural gas futures in early trading Tuesday. The January Nymex contract was up 8.3 cents to $2.788/MMBtu at around 8:50 a.m. ET. The American and European weather models maintained a wide difference in heating degree day (HDD) expectations in their overnight runs, with the American… 

metmike: The strength was almost entirely from the colder European model overnight. Near the end of end, we starting going up and that continued for numerous consecutive hours.

The EIA report out 1 day early, tomorrow might be pretty bullish too.

hayman,

Wonderful trade being long NGG21 by you. Congrats and thanks for sharing!

12z Euro was milder so we gave back almost half the gains from the highs.

Natural Gas Futures Jump on Expectations for Colder Conditions and Lofty Storage Withdrawal

Natural gas futures advanced Tuesday on forecasts for colder weather and a bullish withdrawal from storage. Improved liquefied natural gas (LNG) levels added a dose of optimism. The January Nymex contract climbed 7.5 cents day/day and settled at $2.780/MMBtu. February rose 6.0 cents to $2.749. NGI’s Spot Gas National Avg. rose 5.5 cents to $2.870.  … 

   December 22, 2020

EE colder overnight igniting big rally. EE a bit milder early afternoon taking away almost half the gains.

-3 HDD's on the EE, so we dropped a bit.

  ‹ See All Natural Gas Reports

Weekly Natural Gas Storage Report

 for week ending December 18, 2020   |  Released: December 23, 2020 at 12:00 p.m.   |  Next Release: December 31, 2020 

                                                                                                                                                                                                                                                -152 BEARISH!                                                                                                                     

Summary

Working gas in storage was 3,574 Bcf as of Friday, December 18, 2020, according to EIA estimates. This represents  a net decrease of 152 Bcf from the previous week. Stocks were 278 Bcf higher than last year at this time and 218 Bcf above the five-year average of 3,356 Bcf. At 3,574 Bcf, total working gas is  within the five-year historical range.

 For information on sampling error in this report, see Estimated Measures of Sampling Variability table below. 

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

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

Triple-Digit Storage Withdrawal Fails to Boost January Natural Gas Futures

Time to face the music. Storage is above average. Biden is seemingly about to become president. And he has been anti-fossil fuels. Weather is not cooperating for the average winter. Yet. And machine trading is at a premium. I won't mention anything else at this point.

Biden becoming president is bullish for ng prices.

Banning fracking on any land is bullish because it curtails supplies.

However, in order to obliterate the coal industry first, he needs ng. 

The 12z GFS Ensemble lost 24 HDD's from the previous run.

This must be close to a record bearish change in 6 hours! This is why the NG crash accelerated lower.

And the EE, incredible came in +4 HDD COLDER.

Please go to new NG thread (12/27+) for new posts. Thanks.