8-14 Day Outlook Details: (March 23rd – March 30th): An active pattern will start the outlook as reinforcing cold blasts sweep into the northern and eastern US while the southern US and Plains remain relatively mild. Colder than normal conditions should become anchored over the highest use nat gas and heating states of the northern US for the first several days. But what comes after March 26th is where it gets really trick. There should be some sort of very strong temperature gradient across the northern US around this time but exactly where is a problematic and there will be huge swings in national forecasts to come as the models struggle to find direction on where this sharp cold gradient sets up. However it plays out, it should be very exciting as it could lead to a massive US cyclone around March 28th that would surge warm conditions out into the Midwest and Northeast and then follow with several days of colder than normal temperatures. So on and on it goes. Warming over the southern Plains at times with many more cold blasts to come for the Midwest and eastern US into the foreseeable future. This will consistently bring enough cold days within any given draw week to keep demand near or greater than normal. This will also keep supplies below 1.0 Tcf for many weeks to come and maybe, just maybe, winter has one more surprise or two for the markets. We like the odds.

Natural Gas & Heating Demand (compared to normal): MODERATE – HIGH.

Weather Market Threat: Days 1-15: MODERATE – HIGH.

Market Effect: (For March 18th) – The nat gas and heating markets found some buyers Monday and made it a recently rare two day win streak when factoring in Monday’s meager gains. It very well could just be some short term profit taking from the bears with more downside to come. But then again, storage and weather conditions are very supportive of the market and there is plenty of reasons for higher prices, especially as the colder than normal pattern plays out into April for the highest use nat gas states of the northern US. There is a lot of uncertainty for the market to come as weather models will struggle for the foreseeable future in a very complex and stormy pattern. This will lead to wildly varying forecasts from national vendors as well as frustration for big market players trying to plan ahead. So again, we will sit tight and see if the bulls can gradually get momentum over the coming week as the realization that the spring injection season will be WAY behind schedule with the potential for numerous cold or cooler than normal outbreaks to come. Eventually the market will again realize the importance of each of these cold blasts and the damage they are doing in keeping supplies well below the 5 year average every passing week. That’s the way at least we see it. If you believe the nat gas and heating markets moved solely on coming weather when considering current storage levels, then you would believe prices should be supported due to relentless onslaught of chilly weather over the northern US.

The nat gas and heating markets consolidated Friday after selling off Thursday post storage report. The bears clearly have momentum and there is no reason why they won’t try to push prices another leg lower after some potential profit taking. But we believe the market has gotten ahead of itself as many are focused on the calendar and not weather conditions and supplies. The cold blast coming after the brief early week warm up could have played out a bit more impressively if colder air was able to push a bit deeper into the central US. It looks to play out cooler than normal, but not exceptionally so. However, the market bought into a decent warm surge coming March 22-25th which now doesn’t look like much at all. We have been saying this was a very stormy and active pattern coming and there was lots of ways it can play out as the forecast models struggle with lots of chaos in the atmosphere. And true to form, the weekend models brought in a flip-flop to colder conditions than normal instead, pushing the warm up until after the 26th for the Midwest and Northeast. The late March forecasts will hinge on where a very sharp temperature gradient sets up over the northern US or southern Canada thereafter. Feel free to again bite to the warm side, but we know every time it gets closer the forecast data starts backing off. And so the colder than normal pattern for the highest use states of the northern US will hold in place into April as numerous winter storms track across the country with each one being fairly effective in drawing in colder or cooler Canadian air. We have to maintain the view that the longer this cold pattern drags on into April, the more nervous the bears will become as they realize supplies aren’t increasing at rates necessary to support what the market has been hyping, especially with supplies below 1.0 Tcf. Prices will eventually again be supported as the market realizes they placed too much faith supplies would easily be replenished. It just might take a little while longer for the markets to realize it.