The winter 15 (January 15-March 15) / Summer 15 (April 15-October) 15 natural gas spread gained nearly 40% in today's trade as winter demand may be finally coming back into the market.
This spread which settled at .169 on Tuesday widened out by .066 or 39% in today's session to settle at .235.
The winter / summer spread set a recent high of .857 (winter strip price above summer strip price) on November 21st but has since collapsed to a new low for 2014 at .146 by December 8th.
However, as shown on the chart, the sell off from the November high held above former trend line resistance as support which is a bullish technical indicator.
Today's strength in the winter 15 / summer 15 could be the precursor of a winter rally higher. Weather forecasts are slowly shifting back toward colder temperatures.
But until temperatures actually turns cold and remains cold drawing down storage, the natural gas market is not going a difficult time sustaining upside momentum given low storage withdrawals during December and new record highs on domestic dry gas production.
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