Natural gas prices dropped another 2.5% today as they continued to encounter heavy selling from slightly easing cold weather forecasts and elevated production levels. The prompt month January contract bounced right off a $2.88 support level we had been watching, closing a few cents off the lows. 

This came as cash prices were a bit more firm, declining just a few cents on the day as cold began moving in across the country. 

Selling today was not quite as much of a surprise, however, as we saw overnight weather trends as bearish enough to pull prices a leg lower. We warned clients about a bit more downside this morning, and natural gas prices fell right into our support level from $2.88-$2.92. 

This combined with elevated production and lackluster demand in the face of significant warm the past week and a half to push the natural gas strip lower, something we noted in our Note of the Day to clients yesterday morning. 

This came after our Afternoon Update yesterday where we similarly identified another short-term leg lower in prices. 

Meanwhile, in our Morning Update this morning we showed how even contracts out in 2019 took a significant beating amidst a loosening balance the last couple of trading days, indicating early week selling was more not primarily weather-driven. 

Again today we saw the entire front of the natural gas strip decline. 

Yet cold weather risks have allowed F/G to stay relatively firm in the face of significant selling.