Data Teases Colder Pattern Dec 22-25, But Markets Bite Too Early

Written by on December 10, 2018 in NatGasWeather - No comments

Monday, December 10:   Dec’19 nat gas futures spiked 16 cents after the weekend break, likely a combination of technical bullish momentum from Friday, but also likely from the markets thinking cold would be returning around Dec 23-25. Prices rallied even through the weekend data prior to Dec 23-25 was notably milder trending, especially the GFS model that lost more than -16 HDD’s or -25 Bcf in demand from Dec 14-22 compared to Friday’s data.  In our daily report, we mentioned the prospects of cold returning across much of the country for Dec 23-25 had been inconsistent and needed more data to come on board to prove it. When that didn’t happen in the overnight runs as many of the major weather models backed off on the amount of cold east of the Plains for Dec 22-25, prices sold off and are now 5 cents lower.  Cold can most certainly still arrive for the last week of December, but it will need to do a better job of proving it in the days ahead.   Graph below shows the overnight European Ensemble daily HDD totals and note last nights run is milder compared to Sunday’s runs (orange and blue) and with all days after Tuesday below the 30-year average (black dotted line).

Milder pattern setting up by late this week besides weather system tracking across Texas and the South.

 

Some of the weather data teases cold across the northern and eastern US around December 22-25, but it needs to prove it. If it were to happen, the image highlights how cold Canadian air would push across the border.

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