A colder-looking forecast exiting the weekend, albeit with plenty of uncertainty surrounding the outlook for February temperatures, had natural gas futures trading several cents higher early Monday. The February Nymex contract was up 5.8 cents to $1.951/MMBtu shortly after 8:30 a.m. ET.
The last couple days have seen an uptick in model volatility, according to Bespoke Weather Services.
“As the dust settles, we find our forecast a little colder compared to Friday, but with increased uncertainty beyond the start of next week,” the forecaster said. “Some model runs have shown a weakening” of the positive Eastern Pacific Oscillation (EPO), “which would open the door to getting some cold into the pattern, but there is not much consistency in this idea right now.”
The European dataset has been warmer overall but “is actually showing the most weakening of the EPO out in the 11-15 day, so we do allow for some colder than normal conditions in the middle of the nation, but not yet into the East.”
Maxar’s Weather Desk highlighted colder changes compared to late last week for the period Saturday through Feb. 5, including along the East Coast in the early half of this time frame.
“This adjustment accompanies nearby low pressure,” Maxar said. “Uncertainty remains with the feature’s proximity to the coast and its potential interaction with a second storm system tracking into Eastern Canada. A stronger round of cooling is seen from the West to Central during the second half.
“Below normal temperatures are in the Northwest at mid-period and expand toward the Midcontinent late. Still, a warmer than normal composite exists as aboves and much aboves are widespread through mid-period.”
Further out in the Feb. 6-10 time frame, Maxar was forecasting a “pattern in transition.”
“Models have been volatile in the details of the transition, and confidence is on the lower side of average as a result,” the forecaster said. “The composite averages near normal, but in the details are early aboves in the Rockies shifting southward. Belows are from the Northwest to North Central late.”
Despite forecasts exiting the weekend showing an increase in projected gas-weighted heating demand, the overall weather picture remains similar to Friday, according to analysts at EBW Analytics Group.
The pattern remains “much warmer than normal” through Feb. 6, with the Feb. 7-13 period expected to see temperatures “returning to the normal range,” the analysts said. “Ensemble model members, though, are split nearly 50/50 as to the most likely solution during the period starting around Feb. 5, with an unusually large range of outcomes between much warmer than normal to much cooler.”
March crude oil futures were trading $1.62 lower at $52.27/bbl shortly after 8:30 a.m. ET, while February RBOB gasoline was down about 6.1 cents to $1.4539/gal.