Warmer weather in the two-week forecast more than erased last Friday’s significant gains and represents the largest drop in 10 months. The NYMEX front month fell $0.38 USD/MMBtu or 7.1% to settle at $4.91 USD/MMBtu. The downward movement hit the entire curve, with the calendar strip (Jan-26 to Dec-26) dropping an average of 6.1%.  

The upcoming week is still forecasted to be well below normal; however, by December 17th, the weather is expected to flip to above normal for the continent. The Northeast will remain colder than normal, but significantly warmer than previous forecasts. As always, forecasts can change rapidly, but models largely agree on the cold front retreating over the week of Christmas. The high volatility of the last two days further reinforces that the markets have shifted from fundamental-driven to weather-driven. Therefore, be prepared for another aggressive rally should cold return to the end of December forecasts. (PB)