Weather Models Remain Bearish, Natural Gas Needs A Cold January

We are halfway through December and the heating demand setup so far is mixed. We started heating demand with meaningfully colder than normal weather only to see the bearish weather return in the latest outlook. According to CommodityWx Group, heating demand for December is coming in right around the seasonal norm.

Source: Commodity Wx Group

From a storage balance perspective, the large draw we see this week will be followed up by another decent draw in next week's EIA natural gas storage report.

After that, storage draws will be below the 5-year average resulting in a surplus of 36 Bcf versus the 5-year storage over the next 3 reports.

Despite the bullish draw we saw from this week's report (-190 Bcf), natural gas storage is still expected to be in a surplus going into 2025. This is why the natural gas market needs a cold January or else the bulls will have to wait another year before bullish prices enter the calculus.

Weather Remains Bearish

While there are some people on X talking about how there's a potential polar vortex coming, there are no signs of that in the ECMWF-EPS 15 day outlook.

HDDs

6-10 Day Outlook

10-15 Day Outlook

15-Day Cluster