Looking ahead, while the cold weather in Europe is supporting activity in London markets, the domestic picture looks less threatening.  The NAO and AO are both trending towards positive phase, and the extended range Weather Trends outlook is anticipating a pattern that should produce less heating demand in January as compared to last year (see table).  There will still be cold (it is winter) but high stockpiles coupled with lower y/y demand will limit upside risk.

While the short range outlook is for a stronger period of heating demand for the current week across many US population centers from the central states through the east, the longer range outlook for this market is not overly constructive.  The EIA storage numbers from this morning are still showing a very healthy stockpile situation as we approach winter (see EIA chart below).  Currently, spot natgas futures are up around 1%, while the weekly stockpile numbers for week ending 26 Nov are less than 1% lower than this time last year, and +10% vs. the 5 year average. 

The next two weeks show some cold that will keep natural gas and heating oil demand strong, but as we turn to January, a softer demand picture starts to emerge.  The map below depicts the Weather Trends minimum temperature forecast (minT v. last year) for January 2011.  With healthy stocks and a January outlook that does not point to extended periods of extreme cold for 2/3 of the country, this market might find a top that is certainly lower than what was seen last winter.

(blue is cooler than last year; red is warmer than LY)