NatGasWeather.com Daily Report© Issue Time 4:00 am EDT, Tuesday, October 19th, 2021

1-7 Day Weather Summary (Oct 19-25): One weather system will bring showers to New England, while a second system

tracks through the Mtn West w/rain and snow, but both mild w/highs of 40s to 60s. The rest of the US will be nice

w/highs of 60s to 80s for very light national demand. The system currently over the Mtn. West will track across the

Great Lakes and Northeast this weekend w/highs of 40-60s, lows 20s-40s for a modest bump in national demand. For

next week, weather systems will bring rain and snow to the West, while very nice over the eastern 2/3 of the US.

8-15 Day Outlook (Oct 26-Nov 2): High pressure will rule most of the eastern 2/3 of the US with above normal

temperatures and comfortable highs of 60s to 80s. Cooler exceptions are expected across the West Coast and Mountain

West as a barrage of Pacific weather systems bring much needed valley rain and mountain snows w/highs of 30s to 60s.

15-Day Nat Gas Demand: LOW

Weather Market Threat: LOW Today’s Power Burn: 26-27 Bcf Nat Gas Flux: -9 (Neutral)

Weather Discussion & Market Effect: Nov’21 nat gas futures closed 40¢ lower Monday at $5.01. Selling was

attributed to Dutch TTF prices plummeting late in their session, bearish weather patterns over the US into the

foreseeable future, and lower 48-state production increasing to 92 Bcf, up nearly 1 Bcf vs last week. Late day

selling might have also been attributed to longer range forecasts from the ECMWF weather model favoring a

warmer than normal US pattern into mid-November. US prices dropped under $5 this evening, potentially

aided by Dutch TTF prices shedding more than 5% in their new session. The overnight data had both the GFS

and EC lose 4-5 HDDs, mainly on warmer trends for next week. No major changes overall as both still forecast

very light national demand over much of the US through Thursday due to widespread comfortable highs of 60s

to 80s besides the Northwest, Mtn West, and New England where weather systems will ease highs into the

40s to 60s. A moderate increase in national demand will occur Fri-Mon as a weather system over the Great

Lakes and Northeast drops overnight lows into the 30s and 40s, locally 20s. But where the data remains

emphatically bearish is Oct 27-Nov 2 as above normal temperatures rule the eastern 2/3 of the US. The West

is expected to become stormy going forward and where much needed rain and snow will fall to replenish low

river/hydro flows. The latest weather data also wasn’t any better for Asia as warmer than normal conditions

are favored through late October into early November. There will be decent cool shots into N. Europe,

although with weather patterns still a bit too comfortable over western and southern Europe. Essentially, all

three major demand regions (US, Asia, and Europe) will need to wait on widespread cold until November.

Nov'21 prices have dropped a full $1 since Thursday’s EIA report, giving bears the first semblance of control in

nearly 6-months. Bearish weather patterns and US production increasing week over week are viewed as the

primary reasons for selling, although Dutch TTF prices crashing late yesterday likely also weighed. With the

overnight GFS and EC losing several HDDs and holding a bearish US pattern into early November besides a

modest bump this weekend, and with yesterday’s longer range EC model forecasting bearish US patterns into

mid-November, will this be reason for bears to close prices below $5? Or will bulls buy the $1 dip?

Nat Gas Commentary by Prof of Finance A. Paltrinieri: Natural gas prices collapsed yesterday w/Nov’21 down

40¢ to settle at $5.011. The entire forward curve was down due to some loosening to the balance along with

no major cold before the end of October. While there are couple of good days in terms of HDDs, the next 15

day period is not scary at all. On the balance side, we had US lower 48 production up to 92 bcf and near highs

of the past few months. Power burns were loose again around 26.5 bcf due to low wind, while LNG exports

recovered to 10.5 bcf. Overall, this was one of the first day where we witnessed decoupling from TTF

European hub, rallying due to some worries about Gazprom natural gas flows to Europe, then selling back off.

Selected Weather Images:

Tuesday: Nice 60-80s Most of US w/Very Light Demand. Cool Exception Mountain West/N. Plains.

8-15 Day: Comfortable Most US w/Highs of 60s-80s for Light National Demand Besides Cool/Wet West.

Tue-Thu Highs: Comfortable 60s-80s Most of US for Very Light National Demand. Cooler Exceptions w/40-50s Northwest/Mtn West & New England.

Fri-Mon: Colder Wx Systems Northwest & Northeast w/Highs 40s-60s For Moderate Increase In National Demand. Nice 60s-80s Rest of US.

Oct 27-Nov 2: Warm/Nice Most of US w/Highs of 60s-80s Besides Cool/Wet West w/40-50s. Light National Demand & Large Builds Continue.

15-Day TDDs: Both Overnight GFS & EC Lose 4-5 HDDs. Both w/Moderate Bump in Demand Oct 23-26, But Still Very Light Demand Before & After.

EIA Weekly Nat Gas Storage Report Outlook:

EIA Weekly Report Week 1 – Oct 21 (Oct 8-14)

Week 2 – Oct 28 (Oct 15-21)

Week 3 – Nov 4 (Oct 22-28)

NatGasWeather.com Forecast +91-99 Bcf +75-85 Bcf +50-60 Bcf

5-Year Average +69 Bcf +62 Bcf +38 Bcf

Compared to 5-Year Ave Larger vs Normal Build Larger vs Normal Build Slightly Larger vs Normal Build

Recent Trend No Trend Smaller Build No Trend

Bullish (cold) NEUTRAL Bearish (warm)

Notes: Last week’s EIA weekly storage report printed a build of +81 Bcf, smaller than survey averages in the

+90s Bcf, and barely larger than the 5-year average of +79 Bcf to marginally improve deficits versus the 5-year

average to -174 Bcf. This week’s build should be a bit larger than the 5-year average of +69 due to

comfortable temperatures across most of the US this past week, but also due to much stronger wind energy

versus the prior week. The following two EIA reports will also be larger than 5-year averages, improving

deficits towards -115 Bcf by the end of October. The current streak of larger than normal builds is at 4-weeks

and likely will extend to 7-8 weeks since it will require colder weather systems into the northern US, which

isn’t expected until November.

This Week’s EIA Report Temperatures vs Normal

Europe Weather Pattern & Anomaly - Days 1-5, 6-10, & 11-15 (Europe Demand Map)

Days 1-5: 500 mb Height & Anomaly Days 6-10: 500 mb Height & Anomaly Days 11-15: 500 mb Height/Anomaly

Days 1-5: 850 mb Temp & Anomaly Days 6-10: 850 mb Temp & Anomaly Days 11-15: 850 mb Temp/Anomaly

Europe Summary: Cool vs normal northern Europe days 1-5, mostly nice elsewhere. Weather systems with

mild to locally chilly conditions northern and eastern Europe days 6-10, while mild eastern Europe. The 11-15

day period has bouts of cooling continuing across Nordic countries as weather systems track through,

although mostly comfortable western and southern Europe as this important region waits of more

intimidating cold shots, which isn’t expected until November.

Europe Weather: Weeks 3, 4, & 5 – GFS 500 mb Heights & Anomalies (updated daily)

Week 3– (Oct 29-Nov 4) Week 4 – (Nov 5-11) Week 5 – (Nov 12-18)

Summary: The pattern favors bouts of cooling northern Europe through into mid-November but rather

mild western and southern US.

Asia Weather 500 mb Pattern & Anomaly – Days 1-5, 6-10, & 11-15 (Asia Demand Map)

Days 1-5: 500 mb Height & Anomaly Days 6-10: 500 mb Height & Anomaly Days 11-15: 500 mb Height/Anomaly

Days 1-5: 850 mb Temp & Anomaly Days 6-10: 850 mb Temp & Anomaly Days 11-15: 850 mb Temp/Anomaly

Asia Summary: Slightly cool W. China & Japan days 1-5 as weather systems bring showers, while

comfortable elsewhere. A mild/warm pattern days 6-15 most everywhere. Overall, still waiting on

widespread cold into major population areas of China and Japan, which isn’t expected until November.

Asia Weather: Weeks 3, 4, & 5 – GFS 500 mb Heights & Anomalies (updated daily)

Week 3– (Oct 29-Nov 4) Week 4 – (Nov 5-11) Week 5 – (Nov 12-18)

Summary: Recent weather data favors a warmer vs normal pattern for much of China and Japan for the

first half of November for lighter than normal demand.

GFS vs ECMWF 16-Day TDDs (CDD+HDD) vs 30-Year Average (EIA Regions Map)

National

East

South-Central Midwest

Pacific Mountain

Summary: National TDDs will be lower than normal this week but will moderately increase Oct 23-25 as

weather systems track across Midwest and the Northeast. However, national demand is back to light after

as high pressure rules most of the US Oct 26-31 besides the wet West. The Midwest and Northeast both

have swings in demand but not quite cold enough overall.

ECMWF EIA Storage Weeks 5, 6, 7, & 8 - 500 mb Heights & Anomalies (updated Tue & Fri)

EIA Week 5 – (Oct 29-Nov 4): Larger vs Normal Build EIA Week 6 – (Nov 5-11): Larger vs Normal Build

EIA Week 7: (Nov 12-19): Larger vs Normal Build EIA Week 8: (Nov 20-26): Slightly Larger vs Normal Build

Summary: Warm vs normal pattern most of the US for the first half of November. Cooler risks for the 2nd

half of November, EIA Weeks 7-8 as colder Canadian air tries pushing into the northern US.

GFS Ensemble EIA Storage Weeks 4, 5, & 6 – 500 mb Heights & Anomalies (updated daily)

GFS EIA Week 4 – (Oct 29-Nov 4) GFS EIA Week 5 – (Nov 5-11) GFS EIA Week 6 – (Nov 12-18)

Summary: GFS, like the EC, favors warmer vs normal pattern EIA Weeks 4-5 but cooler risks EIA Week 6-8.

Wind Energy Generation - ERCOT, SPP, MISO (Zoom In!)

EIA Weekly Storage Report Wind Totals Week Over Week Changes

EIA Week over Week: +259% This Week’s EIA Report vs Prior 5-Week Average: +3% This week’s EIA storage report wind energy generation is 259% greater than last week’s EIA report. This week’s EIA storage report wind energy generation is 3% stronger than the prior 5-week average. Partial Week means still accumulating for this week.

ERCOT+SPP+MISO

ERCOT

SPP

MISO

3-Month Temperature Forecast & NatGasWeather.com Forecast HDD/CDD vs 10 & 30-Year Normals

October

November

December

Forecast: 201 HDD + 75 CDD 276 30-yr Ave: 268 HDD + 80 CDD 348 10-Yr Ave 269 HDD + 71 CDD 340 vs 30-yr Normal -21% vs 10-yr Normal -19%

Forecast: 540 HDD + 18 CDD 558 30-yr Ave: 577 HDD + 9 CDD 586 10-yr Ave: 569 HDD + 7 CDD 576 vs 30-yr Normal -4% vs 10-yr Normal -3%

Forecast: 855 HDD + 3 CDD 858 30-yr Ave: 896 HDD + 0 CDD 896 10-yr Ave: 806 HDD + 5 CDD 811 vs 30-yr Normal -4% vs 10-yr Normal +6%

Actual Temperatures vs Normal Past 3-Months & Observed HDD/CDD’s vs 10 & 30-Year Normals

July

August

September

Actual: 0 HDD + 344 CDD 344 30-yr Ave: 0 HDD + 338 CDD 338 10-yr Ave: 0 HDD + 362 CDD 362 vs 30-Year: +2% vs 10-Year: -3%

Actual: 0 HDD + 357 CDD 357 30-yr Ave: 0 HDD + 311 CDD 311 10-yr Ave: 0 HDD + 320 CDD 320 vs 30-Year: +15% vs 10-Year: +12%

Actual: 38 HDD + 188 CDD 226 30-yr Ave: 78 HDD + 171 CDD 249 10-yr Ave: 57 HDD+ 206 CDD 263 vs 30-yr Normal -9% vs 10-yr Normal -14%

Monthly Temperatures vs Normal

October 1-17th Actual Temperatures vs Normal

US LNG Feedgas – Daily (Past 7-Days) (Experimental)

Europe Supplies – Storage, % Full, Deficit/Surplus vs 5-Year Average (Zoom In!)

Europe – Current Storage vs 5-Year Ave & Last Year Europe (%) Full vs 5-Year Average & Last Year

Europe Supply Deficit/Surplus vs 5-Year Average

Summary: European storage remains well below normal and only slightly improved over the past few

weeks. Supplies are currently 77% full compared to the 5-year average of 90.7%. Deficits versus the 5-year

average improved slightly over the past several weeks but running out of time to make up ground before

colder weather systems arrive for the first winter draws of the season. Supplies decreased -0.05% day over

day.

2020-21 US Winter Outlook (December-February)

Important Considerations!

La Nina This Winter July 2021: Hottest Month on Record! Greater Odds Texas Arctic Freeze

Summary: This year’s El Nino-Southern Oscillation is expected to strengthen into a moderate La Nina for

the core winter months (Dec-Feb). La Nina tends to bring bouts of frigid air into the north-central

US/Midwest, although warmer than normal over the southern and eastern US. The trend in recent

decades has been La Nina’s being not quite as cold over the Midwest and warmer over the southern and

eastern US. This is likely due to the background global state of the Earth being considerably warmer than

normal since the 1990s, including July 2021 setting a record for the hottest month ever recorded for the

Earth according to NOAA scientists. While we expect the southern US to be warmer than normal this

winter season overall, we expect there’s greater odds of an Arctic Freeze into Texas.

Current Nat Gas Flux Index: -9 (Neutral)

Nat Gas Flux Strategies – (requires numerous consecutive weeks):

Nat Gas Flux -10 to -35: BULLISH – Buy Moderate to Strong Sell-Offs

Nat Gas Flux -9 to +9: NEUTRAL – Expect Choppy Trade or Price Reversal

Nat Gas Flux +10 to +35: BEARISH – Sell Moderate Price Rallies

We developed the Nat Gas Flux to evaluate price movements in the natural gas markets based on changes in

supply/demand dynamics. It assumes normal weather. Below is a description and how to interpret it.

How to read the Nat Gas Flux Index: The index for October 17th is at -8, into the neutral range for the fifth

week in a row (furthest right blue bar), albeit barely this week after trending slightly bullish vs last week. The

neutral range tends to bring choppy trade or a price reversal. Blue Nat Gas Flux weekly bars above zero

indicate a structural loose environment, which our research has shown to historically pressure prices. When

the Nat Gas Flux weekly bars are below zero, prices typically find support, like they have the past 6-months.

The orange line represents the price of the front month nat gas futures contract. You will see when the blue

bars are above zero, such as during 2015 and 2019, prices were pressured and steadily fell. The Nat Gas Flux

Index has been solidly in the bullish range over the past year and prices have rallied strongly, although now to

neutral and where prices have become choppy. It is important to understand Nat Gas Flux assumes normal

weather, so, when much colder/hotter than normal conditions occur, prices often respond.

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