Colder Trends Continue

Written by on October 29, 2019 in NatGasWeather - No comments

Tuesday, October 29: Dec’19 nat gas futures closed 9¢ higher Monday, with Nov’19 up a greater amount ahead of expiration at today’s close. All overnight weather models trended further colder, led by the GFS that added more than 15 HDD’s. The European model trended only slightly further colder overnight by 2-3 HDD’s vs Monday afternoons run but up an impressive 18 HDD’s vs its run 24-hours ago. Prices moved solidly higher overnight as the GFS model came in colder trending. Timing remained consistent with a strong cold shot across the northern US late this week and this weekend, a brief break around Nov 5-6th before additional cold shots follow Nov 7-11th. Overall, an increasingly bullish pattern after further colder trends the past 12-hours. Although, we caution the GFS is likely too cold this run and could easily give numerous HDD’s back early this morning or mid-day. As far as details, high pressure continues to strengthen across the eastern US with highs warming into the 60s to 80s through mid-week, including 60s to near 70°F as far north as NYC. However, frigid air has spread across the western and central US with much colder than normal lows of -0s to 30s. Cold air with this system will finally begin spreading across the east-central and eastern US late in the week, followed by a strong reinforcing cold shot across the Midwest and Northeast this weekend. This weekend cold shot has trended colder since late last week to add numerous HDD’s. The weather data still favors a break around Nov 5-6th, although the length of it continues to shorten as another cold shot is quick on its heels, arriving into the northern US Nov 7-9th. Where the data was most notably colder this round was in the GFS model for Nov 9-12th by showing cold being more aggressive into the US. Much of the data still shows cold fading near or after Nov 12th, although this is subject to changes in time towards cold lingering longer. The net result of the coming colder pattern is for a couple smaller than normal builds, or potentially even the first draw of the season for the EIA report three or four out, preventing surpluses from increasing further. With the GFS adding another 10+ HDD’s on top of the 10 HDD’s it added yesterday, this model has become quite bullish and likely the reason for the overnight data rallying another 5¢ ahead of the European model. But do consider there are numerous other factors in play today, such as expiration of Nov’19 futures, which could induce very quick price swings.

Tuesday’s Weather Map with cold into the western and central US and warm East.


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Forecast lows for this Tuesday morning.


 

A strong reinforcing cold shot this weekend over the northeastern US.


 

Colder trends in the GFS model for around Nov 10. Shading of blue is colder trending, red is warmer trending.


 

Both the GFS and European model have trended colder. However, after the GFS trended much further colder overnight, there now are decent differnces but both bullish.

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