Natural Gas Meets The Press

While the oil market grabbed the spotlight, considering the historic OPEC agreement and rightly so, we also must keep an eye on natural gas. The natural gas market has had an impressive move as of late and yesterday’s price spike got help not only from a slightly friendly supply report but a weather prediction that made news and was front and center on the “Drudge Report”. A headline today says that “KILLER FREEZE TO GRIP USA...COLD ANOMALY, Record cold coming to ‘almost entire USA’ – Low-temperature records set to be SHATTERED” caught traders attention who up until now, were really getting mixed signals about the weather.

Traders were talking about conflicting American and European weather models and are not quite sure if they should be positioning long or short based on the forecast. Now because of these shocking headlines they are giving in to the cold side. Sure, we had a 50bcf withdrawal from supply that was within 1 bcf of the average estimate but the decisive move higher had a lot to do with the press surrounding these ‘killer freeze” reports.

The main report came from climatologist Dr. Roger Pielke Sr. who said that, “'I cannot recall last time I have seen such a cold anomaly forecast across almost the entire USA.” Those thoughts were backed up with a map by Dr. Ryan Maue of WeatherBell showing that over 75% of the USA will be below freezing for overnight lows on December 8th. Dr. Pielke says that cold records will be shattered, “By the end of NEXT week, some states will be running 36 F BELOW NORMAL." These forecasts changed a lot of trader’s positions with this killer cold prediction even though many weather forecasters are skeptical about this prediction. Dave Tolleris of WXRISK feels the forecast is too general to be taken seriously and while he is predicting colder weather, it may not be the historic event some others are predicting. At the same time, it wouldn’t hurt to be pulling out the heavy coats, scarves and mittens just in case. Besides, the cold can make a person feel warm all over when they are long natural gas!

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