It was October natural gas contract options expiry day, and though the daily trading range ticked down from yesterday we still saw prices spike higher into the settle at the front of the strip, with the October contract gaining another 1.5%. 

It was clear that very strong cash prices pulled up the whole strip, with the October/November contract spread spiking significantly again today. 

The February/March G/H spread also continued to take off today. 

Today’s rally was not particularly surprising, we are less confident in any reversal, and see the path of least resistance up towards $3.07-$3.1 for prices. Winter prices are solidly more firm today, which is certainly supportive. Lingering cash strength could prop up the front of the strip as well… It was that strong cash prices that got the whole front of the strip rallying today after early AM declines. 

Today’s rally continuation came even as GWDD forecasts for the next couple of weeks are not particularly impressive as warm risks dominate in the South and East despite a cold Midwest. 

Meanwhile, it’s clear that the market is entering a period of increased pre-winter volatility, with average trading ranges skyrocketing over the past week.