Weather models diverged today, causing fluctuations in market sentiment. The European Model (ECMWF) showed signs of warming in the 8-14 day forecast, which caused markets to momentarily drop; however, an afternoon revision to the Global Forecast System Model (GFS) showed colder temperatures in that same period, pushing prices back into the positives. Both models show colder than normal temperatures in the 1-7 day forecast.

After all the weather noise, the NYMEX front month settled at a 3-year high of $4.91 USD/MMBtu, $0.07 USD/MMBtu or 1.5% higher than Friday. The start of cold weather is already affecting cash prices at Dawn as DDI surpassed $5.60 CAD/GJ today. With the average temperatures in Ontario only expected to get colder, be prepared for the average DDI price to surpass $6.00 CAD/GJ this month. Further bullish support may come from Appalachia, where freeze offs are expected on December 10th when temperatures dip below -10°C. The region that produces approximately 35 bcf/d can expect volumes to drop 1.5 bcf/d due to the cold. This production drop will pressure Dawn to withdraw additional gas from storage to meet demand. (PB)