Mid-October warmth remains a key focus of natural gas traders as they try and judge just how much heating demand will be reduced. We saw prices today attempt to recover some of their losses from last week hitting $2.88 support-turned-resistance before gradually selling off through the day and closing near the lows.
With recent heat across the country, we have been seeing stronger cash prices with impressive power burns. Cash prices declined slightly today in line with the prompt pullback, but their recent strength appears due in part to these burns and to lingering production shut-ins from Nate in the Gulf of Mexico. On the demand side, meanwhile, it will take a bit longer to just see how much demand was lost via power outages from Nate.
Today we published our flagship Weekly Natural Gas Update, which is the most comprehensive report we issue on weather and the natural gas market. In it, we outlined both recent market tightness and the expected impact of weather on the supply/demand balance through the month of October. Of note for regional traders was the recent deficit in gas continuing across the Pacific which is unlikely to ease in the face of cold weather across the Pacific Northwest.
Recent American GEFS guidance for October 21st shows how only the Pacific Northwest has any real cold risks in the medium-range, with heat widespread in the center of the country.
