The NYMEX February front month contract was down 23 cents (-6.4%) to $3.43 US/mm today. I will be interested if the February contract closes below December 27^th’s low of $3.293 (the narrow, isolated candle), since traders might take it as a sign that the next leg will be down. Of course, we could also rally and break above the recent high of $4.20 on Monday December 30^th, but that would open the door to producers really getting aggressive with output.

Early consensus is for a withdrawal of -77 Bcf from storage for the week ending January 3^rd, which would be smaller than the previous week’s withdrawal of -116 Bcf. However, next week’s report will likely be larger with all this cold weather.

We know that it will be cold and spot prices will spike up. The question is whether it will be cold enough to really change the market dynamic (bullish for natural gas) or will it be cold but less cold than anticipated (bearish for natural gas).

According to the NOAA’s temperature outlook, the rest of January is looking cold. But the Q1 forecast is for mostly warmer weather. Both can be right but would require February and March to be warmer than average.