Natural Gas News: Futures Steady as Weather Models Clash Ahead of EIA Data
Weather Models in Disagreement
Weather forecasts are contributing to market uncertainty, with the Global Forecast System (GFS) and the European model (EC) diverging in their outlooks for early January. The GFS trended colder, adding 8 heating degree days (HDDs) for the first week of January and predicting significant cold across the U.S. from January 7 to 11.
In contrast, the EC model projected warmer temperatures, reducing HDDs by 5 to 6 for the same period. This discrepancy of over 15 HDDs between the two models for January 6 to 11 is causing volatility, with traders leaning toward the EC model’s warmer outlook, contributing to weaker prices on Thursday.
Near-Term Weather and Demand
Forecasts for December 26 to January 1 suggest that much of the U.S. will experience above-normal temperatures. Northern regions are expected to see highs in the 30s to 50s, while the South will range from the 50s to 70s. Despite ongoing weather systems bringing rain and snow, overall national demand is projected to remain light through the weekend, limiting immediate upside potential for gas prices.
EIA Storage Outlook
Last week’s EIA report indicated a 125 Bcf withdrawal, leaving storage levels at 3,622 Bcf as of December 13. This puts stocks 20 Bcf higher than the same period last year and 132 Bcf above the five-year average. Analysts are expecting a 100 Bcf draw for today’s report, reflecting mild weather and modest demand.
