Late-Season Cooling Demand Boosts Natural Gas Prices

Though late September rarely provides much in the way of weather-driven natural gas demand, weather model guidance is now demonstrating that we could see some impressive cooling demand over the next couple of weeks. In the near-term, the National Weather Service is predicting that Population Weighted Cooling Degree Days (PWCDDs) will be above average from at least Friday through September 19th, and presumably far longer. 

The American GFS ensembles show this risk continuing into the medium and long-range, with their early morning run showing temperatures far above average across the East in the 8-14 Day range (courtesy of the Penn State E-Wall site). 

Usually through September we see PWCDDs decrease rather dramatically around this point, as we average about 6 PWCDDs on the 13th and that falls to 4 by the 23rd. 

That is not always the case, though. Last year we had a rather strong burst of heat in the second half of September that led to a second round of cooling demand. 

Our forecasts from the morning took this into account, and we saw a decent tick up in Gas Weighted Degree Days (GWDDs) through the next 15 days when compared to last afternoon. Confidence is still not there that heat will be as strong as last year, especially with a couple more days of lingering cool in the East, but confidence is high that cooling demand will get decently above average. 

Yet this afternoon we are seeing guidance become even more impressive with some of the forecast heat. This seemed to help natural gas prices sustain their gains and close up decently on the day.