Will Colder US Weather Patterns Finally Arrive in January?

US natural gas prices (NGF24) , (NGG24) , (BOIL) , and (UNG) have been strong the past several sessions despite one of the warmest Decembers on record.  As a result of such an exceptionally warm start to winter, surpluses are expected to increase to over +350 Bcf after the recent and coming warmth through December 30th is accounted for.  However, colder weather patterns are set to arrive to start January as weather systems track across the southern US, while temperatures also cool several degrees over the northern US.  This is expected to result in closer to seasonal demand January 1-5.  More importantly, there's potential for more impressive cold to spread across the US Jan 6-15 if frosty Canadian air is able to finally advance into the northern US. 

While there will be several weather systems tracking across the US through December 30th, including one tracking out of the Rockies and into the central US Christmas Eve and Christmas Day. However, they won't contain much subfreezing air, evidenced by highs over much of the US remain nearing near to warmer than normal, and where highs over the northern US will be mostly in the 30s to 50s and with little subfreezing air, while the southern US is mild with highs of 40s to 70s.  

There will be colder weather systems track across the southern and US Dec 30-Jan 5 with rain and snow, and with greater coverage of subfreezing highs over the Midwest and Northeast for a bump in national demand to closer to seasonal levels.  Make no mistake, the Dec 30-Jan 5 isn't frigid, just much better than it's been for all of December.  

The latest GFS and ECMWF 15-day weather forecast per national daily Heating Degree Days (HDDs) show very light national demand through Dec 29-30 due to little coverage of highs below freezing, but then with stronger and more seasonal demand Dec 31-Jan 5 as cooler weather systems track across the US.  

What the natural gas markets are most interested in is whether more intimidating cold shots arrive into the US Jan 6-15, which there's potential for as cold air slides out of south-central Canada and into the northern US with highs of 10s to 30s and lows of -0s to 20s.  In addition, weather systems are also expected to continue across the southern US to aid stronger national demand.  However, the Jan 6-15 is quite far out and there are ways the weather data trends warmer in time.  As such, after an exceptionally warm December for the entire US, the onus is on colder weather patterns coming through Jan 6-15 or it could lead to disappointment.  And if cold fails to arrive, Jan 6-15, surpluses would increase over +400 Bcf, a hefty amount and why it's important colder systems arrive to prevent a woefully oversupplied commodity.   For now, we give the benefit of the doubt a couple cold shots will sweep across the US Jan 6-15 for strong national demand but with a watchful eye the weather data could disappoint and trend warmer in time.

In summary, December weather patterns have been much warmer vs normal for the entire US but will finally be closer to seasonal Dec 31-Jan 5.  However, it's up to colder weather patterns proving it for Jan 6-15 if stronger than normal demand and a bullish stance to weather patterns are to finally be expected.  Much of the weather data does show more intimidating cold shot Jan 6-15 but the onus is on the colder case proving and not backing off, which could be challenging with an El Nino still in play and with the overall global background state much warmer than normal.  

For the latest natural gas weather forecasts and access to Live HDD/CDD weather model statistics (GFS, ECMWF, CFS, etc.) visit us at www.natgasweather.com