After strength early this morning, the December natural gas contract settled down a bit less than a percent as record production numbers and bearish fundamental headlines outweighed a slightly smaller than expected storage injection as announced by the EIA. 

In what was a new development, it was the February contract that saw the largest losses on the day. 

Prices initially found strength on firm physical prices and overnight forecasts that were still relatively supportive. This was unsurprising as we noted yesterday that there was “short-term upside above $3.3 increasingly possible if this cold signal holds overnight…” as it did. Then we outlined that “a brief bounce over $3.3 appears likely” but “…bounces above $3.3 appear likely to fail through tomorrow” thanks in part to forecasts that did not cool all that much more overnight, and sure enough prices reversed off a high of $3.318 down to a low of $3.216. 

Those forecasts did cool this afternoon, though, as we saw another slew of colder weather model guidance. 

While this did provide support, gas prices were already off solidly following an EIA print that was 5 bcf below our 53 bcf estimate but just a touch below the consensus. 

Of note was a meager build of just 1 bcf in the East thanks to much colder weather last week. 

Current weather forecasts are likely to shift into the weekend and how that should impact natural gas prices.