Natural gas prices sold-off again today, losing another 2% as the back of the strip led prices lower. 

We saw overproduction concerns as front and center today, with the January prompt month contract outperforming the other two winter contracts, and the back of the strip selling off almost as much as the front. 

Yet we wanted to focus our blog today on another bearish factor for natural gas: under-performing cold. We entered the month of December with calls for rather impressive cold, and models showed a strong mid-month cold shot as quite likely. Just take a look at these 8-14 Day forecasts from the Climate Prediction Center on December 1st. Cold was clearly high confidence. 

At the time, we were forecasting gradually colder weather through the first three weeks of December, as models showed a transition to a colder pattern. Yet our weather models ended up consistently over-predicting the extent of cold, as forecasts moderated as each cold shot approached. While we did get a number of days with Gas Weighted Degree Days (GWDDs) above seasonal averages, they were not nearly as cold as we originally forecast. Below we show our 15-Day GWDD forecast from December 1st as well as the actual observations and the historical norms. 

The result was that GWDDs through the first 18 days of December were actually below both last year’s levels and climate averages, though slightly above the 5-year average. 

At least part of this may be attributed to a lack of snow cover across the source region of the cold. Snow cover tends to help cold air masses maintain their intensity as they move south, as otherwise these air masses tend to moderate as they slide southward and move over warmer land. Though there is decent snow cover over Canada, central Canada is still lacking significant snow depth and there is little snow cover over the center of the country as well, seen in the below image from NOAA. This could be partially responsible for recent trends away from the next cold shot reaching as far south. 

Print Friendly, PDF & Email