The Guest Blog

Schork: Nat Gas Bulls Need a Snow Day

Stephen Schork, Editor, The Schork Report

As we look ahead to this winter, the latest forecast from the International Research Institute for Climate and Society (IRI), is calling for a cold winter in the Eastern U.S., down through east Texas, a normal winter in the Midwest, out through the Rockies and into California, but a warm winter through the Pacific Northwest and Plains and through all of Canada.

Natural Gas

The IRI is also calling for a warm winter in West and Central Europe. That’s important. A warm winter in Europe…

1) Mutes the impact to Europe regarding the Kremlin’s annual game of chicken with Ukrainian gas transport.

2) Creates the potential of stranded LNG cargoes.

Bottom line, the inn is full. The 2009 refill season is officially over, but the EIA is already warning that injections may continue well into this month.

As such, the NYMEX is trading accordingly. Over the last week the March 2010 contract moved back to a discount to the April 2010 contract. That’s rather ominous, i.e. we are on the eve of seasonal demand, yet traders on the NYMEX are discounting this winter’s supply.

Spot NYMEX Henry Hub gas futures spiked to 5.318 on October 21st, i.e. in the midst of one of the coldest October’s on record. Temperatures have since moderated significantly and industrial and commercial demand continues to lag.

In this vein, without significant heating demand this December and January, here at we predict that the odds are short that the October 21st high will wind up being the bull’s high-water mark for this winter.


Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.