The July natural gas contract attempted to rally this morning for reasons outlined for clients in our Note of the Day, but it reversed and settled lower on cooler forecasts that showed limited cooling demand to close out July. 

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This reversal was forecast in our Morning Update, where we noted a sizable drop in our GWDD forecast from yesterday. 

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Our Morning Update outlined exactly why the morning bounce was likely to fail and why prices would fall through the afternoon.  

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Prices did not quite reach $2.8 and proceeded to then sell off through the day. We saw strong signaling along the natural gas strip that led to the increased confidence this morning that the bounce would fail. The entire strip took a solid loss today, as seen below.  

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The result was that the V/F October/January spread that we have been watching here barely moved at all on the day despite a two-cent decline in the prompt month contract. 

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The Climate Prediction Center picked up on these cool trends in their latest update this afternoon.  

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This comes far after we first alerted clients to bearish risks today, though, in our Morning Text Message Alert at 6:41 AM Eastern. Though prices did not quite get to $2.72 they dropped down to $2.731 after touching $2.788.  

Moving into the day tomorrow we should see prices increasingly driven by speculation around the Thursday EIA print, where we have seen a rather wide range of estimates (from the upper 40s to the mid-60s). We have been outlining our expectation for the Thursday print each day for clients, and today in our Seasonal Trader Report provided both our updated 5-month GWDD forecast and seasonal storage model, which integrates our seasonal forecast with the latest weather-adjusted natural gas balance to forecast end of injection season storage levels and potential impacts on natural gas prices.