Amid continued warmth from the latest guidance, natural gas futures were trading slightly lower early Thursday. The February Nymex contract was off 1.1 cents to $2.178/MMBtu at around 8:40 a.m. ET.
The warmer forecast trends that have dominated in recent weeks carried over into the start of the new year, with both the American and European models lowering demand expectations compared to Tuesday’s data, according to Bespoke Weather Services.
“We continue to see a pattern where any colder troughs drop into the West, and with a total lack of blocking on the Atlantic side, the response is warm ridging much more often than not in the eastern half of the nation,” Bespoke said. “With today’s forecast, we now project January to be another top 10 warm month, and that even assumes normal temperatures beyond day 15, so there is room to climb the charts more if this pattern doesn’t change.
“We did see such a change last January after a warm first half, but so far see no clear signs of a repeat.”
Maxar’s Weather Desk similarly highlighted warmer trends for days six through 15 of the latest forecast window.
For Tuesday through Jan. 11, the forecaster called for above-normal temperatures “across the eastern half at the onset ahead of high pressure trekking into the Midcontinent. As the high progresses eastward, a brief round of marginal belows is expected across the eastern half mid-period, with perhaps some additional cold risk attached. As the high moves offshore, a broad coverage of much aboves is projected for the eastern half by the end of the period.”
Further out in the Jan. 12-16 time frame, Maxar also predicted “prevalent” above-normal temperatures over the eastern half of the Lower 48 states.
“Belows, meanwhile, are focused across the West, particularly from the northern Rockies entering into the northern Plains late with high pressure beginning to intrude in,” the forecaster said.
Still, despite continued warmer trends in the outlook, there were two factors serving to limit losses early Thursday, according to EBW Analytics Group. For one, the firm observed “signs that warm anomalies could finally end” after Jan. 16.
Also potentially supporting prices, traders could be bracing for a third straight bullish surprise from Friday’s Energy Information Administration (EIA) storage report, according to EBW. Estimates submitted to Bloomberg as of early Thursday pointed to a 63 Bcf withdrawal for the week ended Dec. 27, with predictions ranging from a pull of 34 Bcf to a 76 Bcf withdrawal.
Last year, EIA recorded a 24 Bcf withdrawal for the similar week, and the five-year average is a withdrawal of 89 Bcf.
“Warmer-than-normal anomalies are likely to lessen by the end of the 15-day window but could continue even further into January,” EBW said. “If tomorrow’s storage report is not as bullish as expected, prices could erode even further, but a bottom could be near.”
February crude oil futures were trading close to even at $61.09/bbl at around 8:40 a.m. ET, while February RBOB gasoline was trading 1.8 cents higher at $1.7085/gal.