Nat Gas Weekly: Groundhog Day/Week Update. 2/2/25

The groundhog saw his shadow, and it is money in the bank for NG!!!!! HA!!!
This week’s video will discuss the verification of the warm up last week and next week in the US. How another Elongated Polar Vortex (EPV), the ninth of the season looks to finally break the stratospheres back with a Sudden Stratospheric Warming (SSW) event. Although not so sure why something that has been seen for the last three weeks is called sudden! How that is going to influence the next 3-8 weeks, and the verification form past events. Remember that the models have a hard time with the interaction of different forcing inputs. They can see the warm moist Pacific air, they can see the cold dense air in the Artic, but they have a difficult time having the two inter act. Throw in there an extreme Polar event 80 miles up in the atmosphere and they are down right horrible. But luckily, we have the past to help us see what these conditions have done and are likely to do again.
We are so concerned about the weather due to it being close to ½ of the demand for NG usage. So if price discovery is dictated by the supply/demand balance and the weather influences one half of the demand, then we better understand what the weather will bring. Storage is dropping in Europe, putting a big demand for worldwide LNG. Tenders earmarked for Asia a being sold on the spot market and redirected to Europe. It looks that Europe is going to cool down again along with North America. I will post another time on the interaction between western European and North American weather patterns. But know that what happens in the US is telegraphed 7-10 days in Western Europe. This is why TTF has rallied this past week. They are looking at the same forcing patterns we are looking at. They get cold then the US get cold. They warm up the US warms up. Great tool to use in the summer also.
This coming cold is going to eat away into the US NG storage. Two weeks ago, it was predicted that storage was going to end up somewhere around 1.7 TCF at the end of the withdrawal season. But the market only looking at the model’s, screaming winter is over, winter is over!!!! Had industry readjusting the storage numbers back up closer to 2.0 TCF. Which would put the season end 250BCF above the 5-year average. This cold will eat into storage, LNG facilities will continue to come on-line and producers will continue to show proper supply management. Listen to the Company conference calls from the big E&Ps, Pipeline provider, and oil/gas field providers. They are all in agreement that last year’s pricing killed their bottom line and discipline is the word of the day.
I expect the models to continue to print colder as they take into count the MJO, major teleconnections, and the PV. The estimates for storage will begin to drop and the price to increase. There is much talk about Tariffs and the Chinese DeepSeek AI model going to influence the supply/demand balance. But these just become good excuses to sell rallies and pump price drops. The current COT report shows longs at their highest ratio to shorts since last May’s price rally. So be very careful of Long Squeezes. Just like a short squeeze, the future positions are highly leveraged and rapid and volatile price drops are more the rule than the exception. So, make sure you are watching the models during the 03:00-05:00 GMT and 17:00-19:00 GMT. I believe that the general trend is to be up until mid-March and will be investing and trading accordingly. These is not advice, but just what I am looking at for the basis of my own personal trading. I will post later in the week dedicated to only supply/demand/storage after the early week estimates get revised higher from the colder model prints and the overall general industry discussing the colder weather coming. Remember the institutional boys only want to discuss in the open what they have already bet on so the retail and smaller investor provide them with healthy exit points.
Keep it Burning!