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Monday Nov 16th - Natural Gas Futures Nose Dive

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At market open on Monday Nov 16th, Natural Gas futures plummet more than 6%,  LIVE GRAPH INTERACTIVE

Natural Gas Price Fundamental Weekly Forecast – November Storage Build, Mild Temps Point Toward Weaker Demand

The EIA reported on Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6.

9 hours ago (Nov 16, 2020 4:40 AM GMT)

Natural gas futures eked out a small gain last week, but there were no indications that the move represented anything other than profit-taking and short-covering following a six-consecutive day decline.

The price action suggests traders are trying to establish a support base around a technical retracement zone at $3.014 to $3.929, but the lack of new longs is preventing the market from extending much beyond that area.

Last week, January natural gas futures settled at $3.122, up $0.091 or +3.00%.

Firm liquefied natural gas (LNG) exports basically kept this market afloat last week, but an EIA injection during the second week of November was a back-breaker for any traders thinking of a quick return to bull-market conditions.

US Energy Information Administration Weekly Storage Report

The EIA reported on Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6. On average, the supply data, which were delayed by a day this week due to Wednesday’s Veteran’s Day holiday, were expected to show a decline of 4 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.927 trillion cubic feet, up 196 billion cubic feet from a year ago, and 176 billion cubic feet above the five-year average, the government said.

Ahead of the report, Natural Gas Intelligence (NGI) reported, a Bloomberg survey found a median estimate of a 3 Billion Cubic Foot (Bcf) decrease in storage with estimates ranging from a withdrawal of 12 Bcf to an injection of 5 Bcf. The results of a Wall Street Journal poll ranged from a pull of 12 Bcf to an injection of 10 Bcf and landed at an average decrease of 2 Bcf.

A Reuters survey found estimates ranging from a withdrawal of 12 Bcf to an injection of 5 Bcf, with a median decrease of 3 Bcf.

NGI’s storage model, however, predicted a 5 Bcf increase. Energy Aspects issued a preliminary estimate of a 10 Bcf injection.

Short-Term Weather Outlook

According to NatGasWeather for November 16 to 22, “A cold shot will track across the Midwest and Northeast Monday – Wednesday with rain and snow and chilly lows of 10s to 30s for a swing to stronger national demand. The southern U.S. remains warm with/highs of 60s to 80s, while weather systems with rain and snow continue into the Northwest with mid to cool highs of 30s to 50s.

After the Northeast system exits Wednesday, much of the U.S. will become warmer than normal Thursday – Sunday with highs of 50s – 60s North and 60s to 80s South for light national demand. Overall, moderate demand through Wednesday, then low.”

Weekly Forecast

The EIA report was bearish but the price action suggested this was already anticipated. Nonetheless, the absence of cold temperatures over the next two weeks has traders bracing for another week of selling pressure as the weather continues to frustrate bullish traders.

Firm LNG demand could slow down the selling pressure, but is just not strong enough to turn it around. Most of all, supply should be going down at this time and it isn’t, forcing frustrated weak longs to dump positions.

For a look at all of today’s economic events, check out our economic calendar.



Edited by Tom Nolan

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Natural Gas Is Worst Performer Among Top Commodities on Weather

(Bloomberg) -- U.S. natural gas futures plunged the most in more than a month, making the fuel the worst performer among major commodities, as milder autumn forecasts stoked concern that a warm winter will crush heating demand.

Gas for December delivery settled down 10%, the biggest decline in eight weeks, at $2.697 per million British thermal units. That’s in stark contrast to major commodities including oil, which rose amid optimism over prospects for a Covid-19 vaccine.

Investors have for the past several weeks piled up bullish bets on natural gas on the hopes that a harsh winter would boost demand for heating fuels and help wipe out a supply glut that earlier this year sent prices to the lowest level in decades. Gas surged to a two-year high last month, also buoyed by lower output and record export demand.


But the recent weather has been a disappointment to traders who see fall as a harbinger of winter gas demand. The U.S. is poised to see mild conditions with only a few cool shots through the end of the month, according to the Commodity Weather Group. The number of heating degree days, a measure of weather-driven gas demand factoring in population, is seen at 275, which compares to a 10-year average of 316, the commercial forecaster said in a report.

“The market action in natural gas reminds me that I should not trust long-term weather” forecasts, Phil Flynn, senior market analyst at Price Futures Group, said in a note. “The fundamentals on natural gas look supportive but if we get another warm winter, natural gas may just stay about where it is.”

U.S. natural gas production has also rebounded from a decline last week, also weighing on prices.

Shares of gas producers retreated, with EQT Corp. dropping 3.8% and Antero Resources Corp. 1.8%, in sharp contrast to oil producer and refiner stocks, which rallied strongly Monday on oil’s gains.

Gas for March delivery closed at a 6.9 cents premium over the April contracts. The closely-watched spread, known as the “widowmaker” because of its volatility, has shrunk by more than 70% this month. The narrowing signals that traders are betting on relatively abundant supplies by the end of the heating season.

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U.S. Natural Gas Stocks Close To Record-High At Refill Season End

By Charles Kennedy - Nov 16, 2020, 12:30 PM CST

Natural gas inventories in the United States ended the injection season between April and October 2020 close to the all-time high from 2016, the Energy Information Administration (EIA) said on Monday.  

At the end of the refill season—which is April 1 to October 31—the amount of working natural gas in storage stood at 3,920 billion cubic feet (Bcf), close to the record of 4,047 Bcf from the middle of November 2016, according to EIA data from its latest weekly natural gas inventory report last week.

The injection season this year began on April 1 with inventories above the previous five-year average. On April 1, working natural gas inventories amounted to 2,006 Bcf, or 314 Bcf more than the average April 1 total in the previous five years.  


During the injection season, net additions to inventories were around 2 percent less than the five-year average and 23 percent less than the near-record net injections of 2,571 Bcf reported during the 2019 injection season, the EIA said.

In the spring and early summer this year, the amount of natural gas in storage increased rapidly due to the milder 2019/2020 winter and decreased demand in the economic slowdown caused by measures to contain the pandemic.

By early August, U.S natural gas inventories had jumped above the upper bound of the previous five-year range for that time of the year. Lower natural production and relatively stable demand have slowed the rate of weekly gas injections since August, the EIA said.

According to the latest EIA Weekly Natural Gas Storage Report, working gas in storage was 3,927 Bcf as of November 6, up by 8 Bcf from the previous week. The stocks were within the five-year historical range but were 196 Bcf higher than this time last year and 176 Bcf above the five-year average.

By Charles Kennedy for



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