NYMEX December natural gas futures settled 17.3 cents higher at $4.046/MMBtu Monday as weather forecasts shifted to a colder-than-normal outlook through mid-November for key eastern US consuming regions. The last time the prompt month settled any higher was September 30, when it closed at $4.121/MMBtu. The December contract has risen 25.8 cents in value since it took the prompt position October 30.
"Big up day today as winter is finally here," said Aaron Calder, senior market analyst at Gelber & Associates. He added that forecasts are now indicating what looks like a "polar vortex redux."
Not only did the Midwest and East Coast see cold weather over the weekend, but models such as the US National Weather Service's eight- to 14-day forecast changed over the weekend to reflect the likelihood of below-average temperatures over the eastern half of the country, with the coldest outlook expected in the Southeast.
"We finally got more than just a forecast for cold weather," said Tom Saal, broker at INTL FC Stone. "Now is the time of year where the weather, or a lack of weather, will play a big role in the market."
Calder noted that "domestic and European weather models have done almost a complete 180[-degree turn] since Thursday ... now predicting a steady stream of colder-than-normal air coming down from Canada and into the eastern half of the country."
He added that the threat of a November gas production surge, and continued storage injections, appeared to be keeping buying in check, at least somewhat.
"Natural gas reminds us that while supply isn't an issue (it really never is) perception and psychology -- and, yes, real weather -- is," said independent analyst Jay Levine of enerjay.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
