It was another slower day for natural gas as traders struggled to read into recent weather model trends that have been bouncing around. On the day, the December natural gas contract settled perfectly flat to yesterday.
There was further weakness out along the winter natural gas strip, though.
As a result the December/January natural gas spread narrowed decently on the day, though is still off its narrows set back on Monday.
Our Morning Update highlighted that we held “neutral” natural gas sentiment due to significant weather model volatility and only minor overnight GWDD losses.
This ended up verifying well with the December natural gas contract settling flat on the day, and we saw some factors on the balance side of the equation that would likely provide some support for prices today that we highlighted in our Note of the Day. Now, traders are preparing for an EIA announcement tomorrow that should show a slightly larger storage build than we saw last week thanks to a bit less weather-driven demand.
This will obviously be weighed against the latest overnight weather model forecasts, with the Climate Prediction Center showing more mixed risks now in the long-range.
We highlighted these mixed risks in our Afternoon Update and broke down where we saw weather models trending and accordingly how natural gas risk appeared skewed moving forward. We also outlined our estimate for the natural gas EIA print tomorrow, updating our market sentiment and looking into the latest S/D balance trends of the day.