No images? Click here Thursday's Midday Update Midday Update: Jan’21 nat gas futures went into freefall the past 24-hours after the weather data trended milder for Dec 12-16, dropping from $2.93 to $2.48. Prices dropped to fresh session lows shortly after the EIA reported a bearish draw of -1 Bcf versus expectations of -10-13 Bcf. But the real damage was done by the weather data trending milder for Dec 12-16 since the weather data was already bearish for Dec 4-12. This notable warmer trends for Dec 13-16 has led to considerable market frustration as bulls just can't get any help from weather patterns much of the past 6-weeks. To make matters worse, the latest midday GFS trended further warmer for Dec 13-16 by seeing even less cold air into the northern US. So yet again, weather patterns are failing in grand fashion to cash in on the tighter supply/demand balance. As we mentioned earlier this week, the onus was clearly on cold coming through Dec 12-16 or it could quickly lead to further frustration. And further frustration it is with winter strip prices in freefall since yesterday morning. With weather patterns trending further milder overnight and holding the milder trend midday, this certainly isn't good news for an already oversupplied market. The big question is how many more bulls are still trapped and need to exit? This should lead to some wild trade ahead of the weekend break. Of course, weather patterns trending warmer is driving the carnage. With the midday GFS trending further milder, this clearly isn't good news for bulls hoping for a quick flip back colder. Although, the data is now likely too bearish, so adding demand back could occur at any time. The afternoon European model will be watched to see if it also trends further milder/bearish to better match the warmer GFS. Weather Summary: Chilly conditions will impact the Rockies and Plains the next few days with frosty lows of 10s to 30s, including 20s into N. Texas. One system will exit the South and phase with a cool shot over the Northeast this weekend with rain and snow and locally cool conditions with lows of 20s and 30s. A second milder system will track into Texas with showers this weekend. However, the rest of the US will be quite mild, including the important Midwest region where temperatures will be 15-30F warmer than normal through next week. But the big story is the weather data backed off on the amount and intensity of cold shots into the US Dec 12-16. The data still sees colder air into the northern and central US, just not as widespread or impressive as it showed 24-36 hours ago. 15-Day HDD Forecast: Both the GFS and EC lost 7 HDD's yesterday and most importantly wasn't quite as cold with the set up Dec 13-16. The pattern was already warm and bearish Dec 4-12, so backing off on Dec 13-16 led to big frustration by the nat gas markets. Days 1-7: Chilly conditions will impact the Rockies and Plains the next few days with frosty lows of 10s to 30s, including 20s into N. Texas. One system will exit the South and phase with a cool shot over the Northeast this weekend with rain and snow and locally cool conditions with lows of 20s and 30s. A second milder system will track into Texas with showers this weekend. However, the rest of the US will be quite mild, including the important Midwest region where temperatures will be 15-30F warmer than normal through next week Dec 12-16: Colder systems are still expected into the US Dec 12-17. However, the intensity and coverage of cold simply isn't as impressive as it showed 24-36 hours ago and this has disappointed. The map shows where milder trends occurred for Dec 15 compared to 24-hours ago. |