March natural gas futures closed Thursday’s session lower, but still in a position to post a gain for the week. I didn’t think I’d be writing this because on Monday and Tuesday sellers were dominating the trade and the market was headed towards a key value area I had identified. However, we are in a weather market, hence, the direction of the market can change rather quickly. This seemed to be the reason for the rapid turnaround on Wednesday, December 21.
At the start of the week, the weather services were forecasting above-normal temperatures into early January. This was helping to drive prices lower. The selling came to an abrupt halt on December 21 after updated computer models suggested the predicted stretch of above-normal temperatures could end sooner than expected.
To clarify, as of late Thursday, the U.S. models were still predicting normal to above-normal temperatures. The European model indicated Tuesday afternoon and Wednesday morning that a high pressure ridge over Alaska could send Arctic cold down through the rest of North America. Based on the weak price action on Thursday, it appears that traders are still waiting for the U.S. models to confirm the new prediction.
On Thursday, the U.S. Energy Information Administration (EIA) reported that U.S. natural gas stocks decreased by 209 billion cubic feet for the week-ending December 16. Analysts were forecasting a storage decline of between 197 and 210 billion feet so the actual…