Natural gas markets skyrocketed today, with the NYMEX front month increasing $0.39 USD/MMBtu or 13% to settle at $3.40 USD/MMBtu. The entire calendar strip (Nov-25 to Oct-26) increased an average of $0.19 USD/MMBtu or 5%. The general sentiment is that gains were driven by a colder revision to the weather forecast over the next two weeks, driving increased heating demand. Previous forecasts had the end of October and start of November well above normal temperatures. The weekend revision returns forecasts to near normal, with temperatures expected to hover around 10°C in Eastern Canada. 

As the market rallied, traders with speculative short positions (traders betting on the market to drop) were forced to close their positions to avoid increasingly large losses. This reversal in momentum helped to propel natural gas prices higher. Aside from the weather, other fundamental factors remain unchanged. October production remains slightly down from September volumes, LNG flows continue at record volumes, and storage inventories remain very full. (PB)