Monday, December 7, 2015

Natural Gas Rocked, Down 5% On Weather, Supply

Or is it supply, weather?

Following up on Friday's "Natural Gas: EIA Weekly Supply/Demand Report" and just about every Friday's "Natural Gas: EIA Weekly Supply/Demand Report", the now-and-then look at Cheaspeake on Wednesday's and snark on Tuesdays and Thursdays.

Anyhoo, this was Friday's intro:
Despite the bump higher on yesterday's report of the first withdrawal from storage this season the market is very oversupplied. Even more important for strategists, despite the hype of "the Godzilla El Niño" it is not easy to nail down the effects for this season. The U.S. won't necessarily see the lowest number of heating degree days in the history of the world.
That said we've been betting lower since three bucks and think there is an even money chance that by February futures could be testing two bucks....
Front futures $2.065, down .1210 (5.54%).

Here's today's story from the Wall street Journal:

Natural Gas Falls on Weather Forecasts
Mild weather and robust production have pushed the market into oversupply this year
Natural-gas prices slid Monday as forecasts for warm weather persisted, weighing on demand expectations.

Natural gas for January delivery recently fell 7.7 cents, or 3.5%, to $2.109 a million British thermal units on the New York Mercantile Exchange. Prices were on track for their lowest settlement since August.

Mild weather and robust production has pushed the natural-gas market into oversupply this year and pushed prices lower. Weather forecasts released Monday continued to show above-average temperatures in the next two weeks, at a time of year when demand for the heating fuel is typically robust.

“There is no sign of real demand out there from the weather side,” said Scott Shelton, broker at ICAP, in a note. “This is pretty much worst-case scenario.”...MORE
Compare contrast with Oct. 23's "Long Is Wrong: EIA Natural Gas Supply/Demand Report" which referred even further back:
As our attentive (wary) readers may remember:
Sept. 14 
Natural Gas: This Could be The Year Prices Go Down In Winter 
Combine an El Niño winter with an uptick in production and you've got dogs and cats living together, mass hysteria at the NYMEX, etc.... 
Sept. 4 
Natural Gas: EIA Weekly Supply/Demand Report 
As we enter the autumn shoulder season, our obsessive preoccupation with supply gives way to El Niño and whither/whether weather.More on that next week....
Here's the last couple week's price action: