The July natural gas contract settled slightly higher on its options expiry today, with the contract set to expire at tomorrow’s settlement.
The July contract clearly led the way higher, with most of the move higher coming into the settle as options expiry helped volume surge.
The result is that we continue to see the N/Q spread move further backward, with 2016 the only other time we saw the spread move this backward approaching expiry.
That 2016 July contract expiry came ahead of a July that saw very significant heat across the South and East.
July this year looks to start quite hot as well, with recent Climate Prediction Center forecasts continuing to favor significant heat across the country in the 8-14 Day time period.
This helped lead us to forecast a strong options expiry for the July contract in our Morning Update this morning.
Then in our Seasonal Trader Report out later this morning we broke down for clients our updated 5-month GWDD forecasts, including what to expect for the rest of July. This came with our Seasonal Trade Idea Generator which provides a look at where risk is skewed along the natural gas strip. Our intraday Note of the Day also looked at when early July heat may break and potential impacts from our updated data on weather-adjusted power burns and balance as well, all combining to provide a broad overview of the natural gas market.
