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Natural Gas Futures Surging as Forecasts Cool Over Weekend

December natural gas futures were trading 13.8 cents higher at $3.857/MMBtu shortly before 9 a.m. ET Monday as colder forecast trends over the weekend provided more fodder for the bulls in a market skittish over lean stockpiles and wintry weather in the near term.

Radiant Solutions reported colder changes compared to Friday’s forecasts for both the six- to 10-day (Nov. 17-21) and 11-15 day (Nov. 22-26) periods. For the six- to 10-day, the colder changes come as “another round of Arctic high pressure is sent southward into the Lower 48. This feature is located over the Midcontinent at the start of the period and is settled over the South by the mid-period.

“Still another round of high pressure in the latter stages reinforces cold in the Eastern Half for then...Overall, below to much below normal temperatures are common in the Eastern Half, while aboves remain limited to the West.”

In the 11-15 day period, Radiant noted lingering high pressure over the eastern third of the country in the early stages, keeping below normal temperatures in the East for longer.

“Above normal temperatures result across the Midcontinent, and most of the East is in the normal category as aboves are seen here late,” the forecaster said. “Confidence remains on the low side of moderate overall, due to the general lack of skill observed in the models of late.”

Bespoke Weather Services added to its gas-weighted degree day (GWDD) expectations in the medium-range, with the current cold pattern expected to linger for longer as another reinforcing cold shot looks to arrive Nov. 18-19.

“Our sentiment is back slightly bullish as we expect incredible physical price strength today with cold peaking into Wednesday,” Bespoke said. “Previously it appeared that any cash strength could be sold into if we were looking to warm dramatically into the final third of November, but with medium-range GWDD additions and long-range warm risks looking less impressive it is hard to see how much strength is sold.

“...Forecasts today appear only marginally more bullish than Friday, but with extraordinary cash strength, an inability of warmth to roll forward as quickly on forecasts and continued concern about very low stockpiles it is difficult for us to call a top yet until GWDD losses are able to become more consistent.”

Based on the colder trends in the 15-day forecast, EBW Analytics Group added 14.8 Bcf of projected demand compared to Friday’s forecast.

“The key question now concerns likely weather in late November and early December,” EBW CEO Andy Weissman said. “Current forecasts call for warmer weather in Week 3 -- but models are still widely split regarding weather after Day 15. Currently, 54% of European ensemble members call for a continued warm pattern, which could end the current rally.”

Meanwhile, 46% call for a return of colder weather, which could push the front-month well above $4.00, according to Weissman.

December crude oil was trading 75 cents higher at $60.94/bbl shortly before 9 a.m. ET, while December RBOB gasoline was up about 3 cents to $1.6521/gal.

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