This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Weather Volatility Continues: Colder Trends Erase More Than Half Of The Black Friday Natural Gas Selloff


Chief Weather Analyst

Tuesday, December 03, 2019 at 10:42AM

One thing you can typically count on in the winter season is weather volatility, often in both directions, and this season is proving to be no different so far. Late last week, we were watching a sizable shift in the weather guidance toward a warmer pattern, which culminated with a massive selloff of nearly 23 cents in prompt month natural gas prices back on Friday. Mind you, anyone who has been around in the natural gas market for awhile will tell you that one must be careful trusting moves during a holiday period, as lower liquidity can exaggerate moves in either direction, but the picture did not look pretty for bulls either way.

How quickly things can change.

The largest change has come in the GEFS model since Friday. We previously picked on this model for busting to the cold side, but to show that weather is an equal-opportunity offender in both directions, here is what the GEFS shows currently for the 6-10 day upper air pattern:

Notice the ridge along the west coast up into Alaska, favorable for cold air transport southward into the U.S, seen in its temperature forecast for the same period.

Now let’s look at what this same model showed back on Friday, valid the exact same dates.

There was no upper level ridging around Alaska, and as such, the flow was more progressive, almost zonal, which is not conducive for cold weather in the U.S. Here is what the model showed for temperature anomalies.

Whoa! It does not take more than a very quick glance to see that this pattern is not close to what it is showing today. Now, it is worth pointing out that the change in the ECMWF model (not shown here, but often a more reliable model, skill score wise) is not this drastic, but it, too, has moved colder due to similar reasons. The modeling clearly is struggling to resolve the features that will drive the upcoming pattern, which is great for price volatility, but can drive weather forecasters batty.

As of this writing, prompt month natural gas prices have made up around 13 cents of the nearly 23 cent selloff from Black Friday.

With weather being by far the main driver of price volatility, keeping track of the latest changes and forecast ideas is of the utmost importance for anyone active trading the natural gas market. That’s where we can help. Sign up for a 10-day FREE trial here to take a look at all of the products we have to offer to keep you updated on developments not just in weather, but on the natural gas fundamentals side as well.

Disclosure: Bespoke Weather Services

Disclaimer: Bespoke Weather Services, LLC believes all information contained in this note to be accurate, but we do not guarantee its accuracy. None of the information in this post or any opinions expressed constitute a solicitation of the purchase or sale of any securities or commodities.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Bespoke Weather Services and is being posted with permission from Bespoke Weather Services. The views expressed in this material are solely those of the author and/or Bespoke Weather Services and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at

trading top