Natural Gas Price Fundamental Daily Forecast – Pressured by Warmer-Than-Normal Near-Term Temperatures

Natural gas futures remain under pressure on Tuesday shortly after the regular session opening in New York on Tuesday. Volume is expected to be extremely light during today’s holiday shortened trading session.

The catalyst behind the weakness are forecasts calling for warmer-than-normal temperatures over the near-term. Additionally, the latest guidance showed mild December weather stretching will into the first week of 2020

At 13:08 GMT, February natural gas is trading $2.203, down $0.014 or -0.63%.

Spot prices are reflecting lower demand expectations, showing discounts throughout the Lower 48. The Natural Gas Intelligence Spot Gas National Average dove 19.5 cents to $2.270.

Meanwhile, Monday’s midday data from the Global Forecast System (GFS) continued to show milder trends over the weekend, including for the first week of January, according to NatGasWeather.

“Stronger cold shots are still expected across the Midwest and Northeast the last couple of days of December and again the first week of January. It’s just the weather data has trended less impressive with the amount of subfreezing air into the U.S. and also doesn’t advance cold air as far southward,” NatGasWeather said. “What makes the pattern quite bearish is the important European model sees only modest amounts of cooling into the northern U.S.” in early January compared to the colder GFS.

“Since the GFS has been woefully over-forecasting cold outbreaks for more than a month,” markets are likely to be skeptical unless the European model is also “on board with any colder patterns,” the forecaster said.

Supply Picture

Genscape Inc. estimated total Lower 48 production of 94.3 Bcf/d over the weekend, up from 93.8 Bcf/d last week and flat with the 94 Bcf/d month-to-date average.

“Production is still trailing out forecast for the month by about 0.3 Bcf/d with persistent outages in the East and freeze-offs in the West, “Genscape senior natural gas analyst Rick Margolin said. “Last week we saw freeze-offs take out more than 1.1 Bcf/d of production. This winter-to-date continues to show more cumulative freeze-offs than any winter since at least Winter 2013/14.