Overnight cold trends in the weather data added to heating demand expectations for later this month and helped spark early gains for natural gas futures Wednesday. The March Nymex contract was up 4.1 cents to $1.829/MMBtu a little after 8:30 a.m. ET.
In a “rather rare” occurrence this winter, weather models extended colder trends overnight, led by the European dataset, which added more than 10 gas-weighted degree days to the outlook, according to Bespoke Weather Services.
“The bulk of the change comes next week with a larger piece of colder air moving through the central United States, also trimming the warming in the East and Southeast,” Bespoke said. “We are adjusting our forecast colder accordingly, but we remain warmer than the model consensus.”
This is because of the continued combination of a positive Eastern Pacific Oscillation and a positive Arctic Oscillation, the forecast said.
“This has been the dominant pattern all season and is why models have consistently been too cold, as these features do not favor significant cold outbreaks into the U.S.,” according to Bespoke. “As such, we respect the recent model changes but feel that the risk is tilted in favor of them being overdone on the amount of cold once again.”
Maxar’s Weather Desk highlighted “large colder changes” during the period starting Monday and continuing through Feb. 21.
The forecast shifted colder in the eastern half of the Lower 48, with the changes “focused under high pressure in Central at mid-period and progressing eastward in the second half,” Maxar said. “Temperatures are forecast to fall to below normal levels in association. However, a primary flow out of the Pacific is a limiting factor in the intensity and durability of the colder air, and still colder models are behind the lowering forecast confidence.”
Analysts at EBW Analytics Group added to their heating demand expectations for the second and third upcoming storage report weeks based on the latest forecasts. They noted expectations for an injection of colder temperatures starting around next Wednesday (Feb. 19) and a “slower warm-up” afterward.
The gain in heating demand “is expected to be short-lived,” the EBW analysts said. “At least for now, there are no signs of a durable cold pattern developing,” with warmer-than-normal temperatures “still expected for the balance of the month. This morning’s shift in the forecast, however, is likely to result in a short-term boost in natural gas prices.”
March crude oil futures were trading $1.13 higher at $51.07/bbl shortly after 8:30 a.m. ET, while March RBOB gasoline was up about 4.6 cents to $1.5606/gal.