Storage Concerns Set In For Natural Gas

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The November natural gas contract shot higher today as traders appear increasingly concerned about low storage levels ahead of the impending winter season. 

The whole winter strip shot higher on the day, but with far less buying from March 2019 and beyond. 

This has pulled the G/H February/March spread to new narrow levels on the day’s rally. 

Traders are keeping an eye on forecasts that show significant cold weather across the Great Plains and Midwest and significant heat in the East in the long-range, resulting in a mixture of heating and cooling demand at times.

Our Morning Update highlighted some of the small GWDD additions we saw over the weekend, but these trends were more significantly furthered in afternoon 12z model guidance. 

Meanwhile, Dominion Transmission announced that they injected 12 bcf of gas into storage this past week, which is tied for their largest injection of the season. 

The result is an expectation that we should see a far larger injection announced on Thursday, with the question really just being how much larger it will be. Last week the market was shocked by a very small storage injection that came in below all expectations, and that clearly scared traders and elevated storage concerns even more. Thursday we will see whether that was a one-off event or the market has been overestimating the amount of gas we’ve been putting in storage.

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