Somewhat cooler trends from the latest forecasts had natural gas futures trading slightly higher early Wednesday. The expiring March Nymex contract was trading 1.1 cents higher at $1.858/MMBtu at around 8:40 a.m. ET.
Coming off a recent stretch of warmer-trending forecasts, the latest weather data heading into Wednesday’s trading came in slightly cooler, including across the Midwest and East during early March, according to Bespoke Weather Services.
“The big picture remains unchanged, still warm-dominated, but we are able to at least get a couple of colder days to mix in at times, and another such case appears to be on the way next week,” Bespoke said. “Still, the high latitude configuration does not favor anything sustainable, so we expect things to warm back up again after next week.”
The forecaster was keeping its official forecast “warmer than what the model consensus explicitly shows, as every brief period of colder weather has been followed by a warm-up that turns out to be more significant than models detect at these longer lead times.”
NatGasWeather characterized the latest forecast adjustments as a “redistribution” of heating degree days (HDD), with demand losses for late this week into this weekend offset by cooler trends over the northern United States around March 5-8.
“Overall, the weather data is a little colder compared to the start of the week,” NatGasWeather said. “Today’s trade will be of interest since the weather data added back several HDD over the past 24 hours, especially in the overnight European model...The supply/demand balance remains much tighter the past month, so any colder trends will certainly be welcomed if they are able to hold.”
Analysts at EBW Analytics Group pointed to signs that downward price momentum could slow for the time being.
Interest in adding to short positions could be “dwindling,” which could lead to “a period of range-bound pricing until clearer signals emerge regarding mid- to late-March weather,” the EBW analysts said. “...Today’s trading is likely to be dominated by the dynamics associated with contract trading, when the few remaining shorts and longs arm wrestle to determine final settlement.
“But another warming is expected at the end of the 15-day window, keeping prices low.”
April crude oil futures were down 61 cents to $49.29/bbl at around 8:40 a.m. ET, while March RBOB gasoline was off about 4.1 cents to $1.4912/gal.