With the latest weather data carrying over warmer themes from the previous day, natural gas futures were trading close to even early on the final day of 2019. The February Nymex contract was trading at $2.187/MMBtu, up 0.1 cents, at around 8:40 a.m. ET.
The Global Forecast System maintained milder trends overnight, advertising a similar demand outlook to Monday’s data, according to NatGasWeather. Meanwhile, the European model dropped an additional 6 heating degree days (HDD) overnight, adding to a 14 HDD decline in Monday’s data, the forecaster said.
“Most of the demand lost the past 24 hours has been due to less intimidating cold air” moving into the northern part of the country starting early next week, NatGasWeather said. This should be “followed by a mild ridge returning over the South and East Jan. 10-14 with much lighter than normal national demand. Simply put, the coming pattern has trended further bearish, with only one to two days of the next 15 expected to have national HDDs above normal, but even then, barely so.”
As 2019 draws to a close, the natural gas market finds itself in a “precarious position,” according to analysts at EBW Analytics Group. The next seven-to-10 days could see prices move sharply in either direction, they said.
“There is still a significant possibility that gas prices will increase,” the EBW analysts said. “Over the next two weeks, cash market demand is likely to strengthen considerably, as ultra-warm weather fades, commercial and industrial demand recovers from the holidays” and gas-weighted HDDs peak in terms of seasonal norms.
“If colder-than-normal weather returns in the second half of January, a short-squeeze is likely, sending prices up sharply.”
On the other hand, the latest forecasts continue to lower heating demand expectations.
“If the 15-day forecast continues to shift warmer early in 2020, there will be too little time left for prices to recover this winter, potentially setting the stage for another major leg lower,” according to EBW.
In terms of balances, Bespoke Weather Services observed no major day/day change. The firm tallied production at 94.7 Bcf/d, off from recent highs, and estimated a “robust” 8.4 Bcf/d of liquefied natural gas (LNG) demand.
“Power burns remain healthy given the holiday period and low weather demand,” Bespoke said. “...Our view remains that current balances would be supportive with even normal weather, but as long as we are stuck in a mid-winter pattern that is decisively skewed to the warmer side, prices can continue to grind lower.”
February crude oil was down 55 cents to $61.13/bbl at around 8:40 a.m. ET, while February RBOB gasoline was off about 1.6 cents to $1.7083/gal.