Natural gas futures for Dec’23 (NGZ23) and Jan’24 (NGF24) fell by 26¢ post-weekend due to a warmer-than-normal weather outlook in the US over the next 15 days. Over the weekend, US lower 48-state production reached record highs at 104 Bcf/day, bolstering weakness.
It is anticipated that the first two weeks of November will have weather that is warmer than average. (Source: Barchart)
7-day Trend Warmer Weather Condition
LNG shipments exceed 14 Bcf/day, which is positive. European gas storage is 99.5% filled, thus LNG shipments may fall in the next weeks. Today, LNG shipments are one of the few positive factors. The current 12z noon GFS ensemble weather data was little altered for the first 7 days but trended warmer by 7 HDD for the 8-15-day prediction. While the new midday 12z weather data was warmer trending, national demand started light to very light through Thursday as most of the southern and eastern halves of the US had comfortable highs of upper 50s to 80s, including upper 60s and 70s in the Ohio Valley. West and far northern US weather systems will bring rain and snow, although it will be moderate with highs in the 40s and 50s and possibly 30s. Most of the US will have nice temperatures through Thursday.
Many experts foresee the first draw of the season in natural gas markets after last week’s frigid cold shot. Due to government facility maintenance, there will be no EIA report this week, thus we won’t know the result until next week. However, with warmer-than-normal temperatures projected for much of the next 15 days, the next two EIA reports are likely to print greater builds, notably report three, where the 5-year average draw is -53 Bcf, significantly lower than our current projection of +5 Bcf. US natural gas surpluses of +205 Bcf will decline to about +165 Bcf after last week’s cold shot, then rise to above +225 Bcf owing to the present and approaching warmer-than-normal US trend. Natural gas prices, including (BOIL), (UNG), and (NGZ23), are drastically lower to start the week due to warm, unfavorable weather. Mean, KOLD closed substantially higher. Recently warm weather models are likely to acquire some demand, so traders should remain on top of them.
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