The volatility continues to be sucked out of the natural gas market, as we had by far our slowest trading day of the year. Prices traded in a narrow 3.2-cent range into the settle, bouncing off the $2.72 support level last night and holding right above it through the trading day today. Post-settle they have now dipped just below it on a bit of volume, though, as traders position for the weekend close. 

In our Morning Update out around 7:45 AM Eastern to clients, we highlighted both that we expected a very tight trading range today and that $2.72 support was likely to hold into the settle despite a few bearish overnight trends. Each of these ended up verifying well overall. 

We continue to see later contracts get bid up a bit more into the settle. The result is a day where again X8 and Z8 saw the smallest declines among the 2018 natural gas contracts. 

This also pulled J/V back near recent lows. 

Support held today even as afternoon GFS ensemble guidance increased warm risks across the center of the country. 

That said, mid-March was always supposed to be relatively warm. Our Note of the Day from last Thursday highlighted the fact that the pattern was always supposed to trend warmer into the middle of the month which would limit upside above the $2.75. That was exactly what we saw through the week. 

Yet while mid-March does see some of these warmer trends, traders are similarly eyeing cold risks later in March. The CFSv2 American climate model continues to show Week 3 cold risks, as shown below. 

Traders next week will have to weigh forecasts of both warmth and cold in different time frames, as well as the expected impact of a larger withdrawal to be reported by the EIA on Thursday. Of course, weather tends to gradually matter less as we move through March and into April, when heating demand falls off, meaning reading balance and spread signaling become that much more important to determine price risk.