August 23 Natural Gas Storage Report: Weather Is Bullish, But This Is Not News To Anyone

The Weather

Last week, the number of total degree-days (TDDs) dropped by 12% w-o-w, as cooling demand weakened – particularly, in the Northeast and Western parts of the country. However, we estimate that total energy demand was no less than 14% above last year’s level. Please note that during this time of the year, heating degree-days (HDDs) have almost no effect on natural gas consumption. Cooling degree-days (CDDs) continue to have a disproportionately stronger effect on consumption, and traders should be paying attention to changes in CDDs. Seasonal trend, however, calls for high, but declining number of CDDs and for a rising but low number of HDDs.

This week, the weather conditions continued to cool down. We estimate that the number of CDDs will drop by 13.0% w-o-w in the week ending August 24. Indeed, we estimate that cooling demand would be about 1% lower than over the same week last year. Next week, however, the heat is going to return. The number of CDDs is currently projected to rise by a whopping 20% w-o-w in the week ending August 31 (see the chart below).

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