NatGasWeather.com Daily Report©

Issue Time: 5:10 am EDT – Thursday, April 6th, 2017

1-7 Day Weather Summary (April 6-12th): A strong spring storm with rain and snow will track across the

eastern US the next several days with heavy showers and thunderstorms ahead of the warm front, and a

wintry mix behind it. With lows dropping 10-25°F below normal, nat gas demand will return to stronger

than normal levels. The West will begin to cool as Pacific weather systems arrive. Demand will ease back

below normal early next week as high pressure with comfortable temperatures of 60s to 80s returns to the

central, southern, and eastern US while the West remains the exception to the cooler side.

8-15 Day Outlook (April 13-20th): Weather systems will sweep across the central and eastern US early in

the outlook with showers, thunderstorms, and slightly cooler than normal conditions. Warm high pressure

will then follow east of the Rockies after April 16th with lighter than normal nat gas demand. The West will

start warm but then cool to below normal. Overall: Slightly stronger than normal demand April 13-15th,

then lighter than normal April 17-20th.

Nat Gas Demand Averaged Over Next 15 Days: Cool, Then Mild, Then Cool, Then Mild

Weather Market Threat: LOW Nat Gas Flux Index: -14 (Bullish)

Weather Discussion & Market Effect: May ’17 nat gas futures jumped 5¢ higher early Wednesday to $3.34, then sold off as the day unfolded to close down a few cents. Today’s EIA weekly storage report is expected to show a build in supplies of +8 to +9 Bcf by most survey averages, below the 5-year average of -13 Bcf. It was warmer than normal over much of the country, exceptionally so over the east-central US. It was slightly cooler than normal over portions of the West, C. Plains, and New England. Our algorithm predicts a build of +6 to +7 Bcf, just a slight touch to the bullish side. Regarding the latest weather data, again milder trends, piggy backing on milder trends from the past few days, especially for late next week and beyond. A very active spring pattern should still be expected to last through the rest of the month, just with swings in demand every several days as weather systems traverse the country with mild conditions out ahead of them, and then slightly cool as they pass overhead. Although, to the slightly mild side overall. Specifically, a relatively strong spring storm will track across the east-central US today and then across the East Coast Friday. There will be heavy showers and thunderstorms associated with this system ahead of the cold front and a wintry mix behind it. Most importantly, temperatures behind the cold front are expected to drop -10 to -25°F below normal, resulting in stronger than normal nat gas demand through Saturday. A return to warmer than normal conditions over all but the western US is expected Sunday-Wednesday to drop national nat gas demand to well below normal due to much of the country experiencing highs in the 60s to 80s. Yet another return to stronger than normal demand is expected late next week when cooling over the West shifts over the central and then eastern US, although, this is where the weather data keeps trending less impressive on the amount of cold air over Canada being tapped by US weather systems. Another mild break is favored east of the Rockies April 17-19 ahead of the next series of spring storms arriving into the West. Simply put, a very active pattern with swings in demand is expected every few days as weather systems traverse the country, just not exceptionally cold. Although, to our view, weather patterns are slightly bearish overall, aided by milder temperature trends for mid-April in recent days.

Nat Gas Commentary by Prof of Finance Andrea P: US lower 48 production Wednesday was near 70 bcf, after an upward revision for Tuesday to reach 70.3 bcf. Even with this revision back above 70 Bcf, production data remains pretty bullish. We had slightly disappointing power burns at 21.4 bcf, possibly a signal higher prices could have affected some demand. Mexican exports are running at 4.2 bcf and LNG is at 2.3 bcf, providing good demand for the shoulder season. For today’s number, I'm at +6 bcf, although given last week’s warmer weather, I still see this as pretty tight value vs last year.

Selected Weather Images -

Thursday: Strong Storm EC US, Warm West

8-15 Day: Slightly Mild Much of US Except NW.

EIA Weekly Report Temperatures vs Normal

Cold Blast Into East Thu-Sat For Surge In Demand

Mild Pattern w/Light Demand April 10-12th Over S & E US Due To Warm Ridge. Cooling Into W.

Cool Shot Sweeps Across US April 13-16th But Recent Data Not As Cold With It. Milder After.

EIA Weekly Nat Gas Storage Report Outlook Table: EIA Weekly Report Week 1 – April 6th

(March 24-30th)

Week 2 – April 13th (March 31-April 6thh)

Week 3 – April 20th (April 7-13thh)

NatGasWeather.com Forecast

+7 Bcf +6 to +18 Bcf +16 to +30 Bcf

5-Year Average -13 Bcf +12 Bcf +35 Bcf

Compared to 5-Year Ave Build Instead of Draw Near Normal Build Slightly Smaller Than

Normal Build

Recent Trend

No Trend No Trend Smaller Build

BULLISH (cold) NEUTRAL (warm) BEARISH

Notes: Last week’s EIA storage report showed a draw on supplies of -43 Bcf, slightly bearish to market

expectations in the mid-40s. This dropped surpluses in supplies vs the 5-year average to +250 Bcf. This

week’s report is expected to show a small build vs normally a draw of -13 Bcf. This should increase

surpluses in supplies back to near +270 Bcf.

Monthly Temperature Anomalies

March 1-31st Actual Temperatures vs Normal

Forecast: 15 CDD+612 HDD 30-yr Ave: 7 + 647 Total CDD/HDD vs Normal

627 654 -4%

Temperature (HDD & CDD) vs Normal Forecasts Next 3 Months

April

May

June

Forecast: 40 CDD+230 HDD 270 30-yr Ave: 40 + 218 258 Total CDD/HDD vs Normal +5%

Forecast: 137 CDD + 140 HDD 277 30-yr Ave: 107 + 164 271 Total CDD/HDD vs Normal +1%

Forecast: 263 CDD + 25 HDD 278 30-yr Ave: 232 CDD + 33 HDD 265 Total CDD/HDD vs Normal +5%

Observed Previous 3-Month Temperature vs Normal

December January February

Total 873 HDD & 13 CDD 886 30-yr Ave (896 + 0) 896 Nat Gas HDD/CDD vs Normal -1%

Total 856 HDD & 7 CDD 863 30-yr Ave (974 + 0) 974 Nat Gas HDD/CDD vs Normal -11%

Total 609 HDD & 10 CDD 619 30-yr Ave (794 + 0) 794 Nat Gas HDD/CDD vs Normal -22%

End of Withdraw Season Supplies (April 31st):

2016/17 (NatGasWeather.com Forecast) 2015/16 (Warm Last Winter) 2013/14 (Cold Winter) 5-Year Average

2,069 Bcf 2,468 Bcf 827 Bcf

1,606 Bcf

Forecast 2016/17 HDD Totals:

October 1st – April 15th (Heating Season) December -February (Winter Season)

3,825 vs 4,408 30-Year Ave 2,319 vs 2,664 30-Year Ave

Current Nat Gas Flux Index: -14

Nat Gas Flux Strategies – (requires numerous consecutive weeks): Nat Gas Flux -10 to -40: Bullish - Buy Moderate to Strong Sell-offs

Nat Gas Flux -9 to +9: Neutral - Expect Choppy Trade or Potential Price Reversal

Nat Gas Flux +10 to +40: Bearish - Sell Moderate Price Rallies

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

on changes in supply/demand dynamics. Below is a description of our proprietary Nat Gas Flux Index

and how to interpret it based on the current market situation.

How to read the Nat Gas Flux: Blue Nat Gas Flux weekly bars above zero (black line) indicate structural loosening, which our research has shown to historically pressure prices. When the Nat Gas Flux weekly blue bars are below zero, prices often find support. The orange line represents the price of the front month nat gas futures contract. You will clearly see when blue bars are above zero, such as during 2014 and 2015, prices were pressured and steadily fell. You will note a short-term rally in prices occurred during Dec 2015, which was based on a couple strong polar outbreaks that intimidated the market, but once they passed, prices sold back off as Nat Gas Flux remained above zero. A reversal in price occurred in March/April 2016 just as Nat Gas Flux flipped below zero, where it has remained through summer. The updated index for March 30TH has it remaining well below zero at -14 (furthest right blue bar on image). That’s not to say, there can’t or won’t be periods where prices sell-off for weeks at a time when the flux is below 0, especially after strong rallies or during mild winter temperatures, much like what occurred several times this winter. It should be considered a weekly index, not daily, and will be updated on Friday's.

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