The January natural gas contract got hit hard today, shooting over 6% lower as balances loosened on warmer weather and long-range forecasts showed only limited colder risks. 

(Click on image to enlarge)

The January contract again logged the largest loss on the day, a testament to the role weather had in pushing prices lower. 

This has already fit very well with our weekly natural gas sentiment which was "Slightly Bearish." 

(Click on image to enlarge)

As expected, weather model guidance was rushing long-range cold risks, with further warm trends in overnight weather model guidance.

We also saw power burns and other demand loosen today, as yesterday we warned that loosening was likely through the week. 

(Click on image to enlarge)

When combined with consistent warm risks through Week 2, this was all the natural gas market needed to sell off significantly. 

Meanwhile, traders will be paying close attention to tomorrow's EIA print to see how much gas we drew last week, when cold came on late in the week. 

Our early estimate is that this print will be similar in balance to the one saw last week, as we expect a solidly larger draw thanks to decently more GWDDs on the week. 

Yet despite storage levels being so low and this draw being rather large, the March/April H/J spread fell off today on those warmer weather trends we had been calling for. 

(Click on image to enlarge)

It will certainly be another busy day with gas prices breaking down below the forming pennant, and we expect volatility to again be elevated with another EIA print.