FYI: On November 21st, we wrote a report indicating that the weather would warm significantly enough through most of the month of December so that natural gas demand would be limited and a previously-set short-term high would be locked in. We emphasized that drawdowns would be below average and supply would grow due to this lack of demand. The report analyzed a number of weather models, showing why we had very high confidence that arctic air would be bottled up in Alaska and northern Canada, allowing mild Pacific air to flood the continental United States. At that time, the February Natural Gas contract was trading around $4.60. On January 5th, that contract settled below $2.90 and has set even lower lows. Much has happened in between, and in this time the natural gas market has begun to separate greatly from pure weather forecasts and demand-side expectations. From reviewing the history of trading in the last 2 months and analyzing weather trends for the coming month, we are able to see that, despite calls that this downward trend may be over, the near-term bottom in natural gas has likely still not been set.
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2015/1/6/weather-forecasts-indicating-natural-gas-may-not-have-yet-bo.html?printerFriendly=true
