The November natural gas contract continued its pullback Friday after a significant rally earlier in the week. Prices overnight recovered quite a bit from a lower settle Thursday, but later in the morning sellers returned, with prices settling just a few cents off the lows.
Again the January contract led the way lower, with small gains for J-V9 on the day as again later contracts bounced into the settle.
The result was new narrows in the X/F spread even as the November contract pulled back.
Our clients were not surprised by today’s price action, as we had continually warned that bounces above $3.2 were likely to fail.
Cash softened just enough so that $3.25 was not quite reached before the large expected reversal.
Traders continued to react to a much larger injection into storage last week, while also looking at weather that is quite hot in the short-term. When looking out over the next 15 days our Morning Update shows GWDDs that only gradually increase, but the composition of those Gas Weighted Degree Days should change dramatically as Cooling Degree Days fall off quickly and Heating Degree Days quickly increase.
We can see this in how the latest 6-10 Day Climate Prediction center forecast still has heat risks across the East even as cold dives into the Midwest, with the 8-14 Day forecast solidly colder then.
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