The Global Forecast System (GFS) weather model shows for the next 6-10 days, below-average temperatures could be seen up and down the East Coast. The result of colder than average temperatures would increase energy demand for nearly 118 million people, reported Ed Vallee, head meteorologist at Empire Weather, adding that increased energy demand could put a bid in natural gas spot prices.
"We continue to watch for much colder risks next week across the Mid Continent as the pattern re-shuffles. This will bleed into key heating demand areas of the Great Lakes and Northeast later in the 6-10 day period, upping demand risk with temperatures well below normal. Beyond this time frame into mid-month, most data remains cooler than normal, especially in the northern tier of the country, and into the Northeast. This would allow heating demand to remain elevated, but upcoming weather data and forecasts will help drive price action as this challenging forecast period is sorted out," said Vallee.
Cold risk into Mid-December is legitimate, but there are plenty of questions.— Ed Vallee | Empire Weather LLC (@EdValleeWx) December 4, 2019
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Heating degree days (HDD) for the Northeast shows an above-trend reading through next week, which the amount of energy it takes to heat a building will jump.
HDD readings for the Southeast are also above trend, spiking in the latter parts of next week.
Natural gas spot prices for Algonquin Citygate (New York) and Transco (New York) have been elevated for the last month thanks to colder weather in the Northeast.
NYMEX Henry Hub Natural Gas spot prices have remained in a descending channel for November and into early December. Warming conditions and oversupply issues remain significant fundamental issues weighing on prices. Though if energy demand on the East Coast picks up in the next 6-10 day period, spot prices could start to stabilize.