By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
Mild weather east of the Rockies continued to weigh on market sentiment late last week as did the first ever January injection. Growing expectations that Freeport will remain shut until at least Feb also contributed to Friday’s 8% plunge. Spot month prices settled Friday’s session down 27.6 cents at $3.419.
Freeport remains the biggest wildcard. At least 2 vessels turned away on Freeport last week after sources claimed the outage would continue until February or later. While Freeport has said the plant was on track to return the 2nd half of Jan, analysts however believe it could be as late as Q2 for Freeport to return.
Price strength this morning is stemming from weather outlooks showing colder than normal temps spreading eastward to encompass much of the US during the last week of January. The coldest anomalies will be felt in the SW. The East Coast remains the exception as temps there will average near normal with the SE the only region expected to see above normal temps during this time.
Consumption levels fell over the long weekend to a low of 111.1 BCF/day on Sunday. Demand this morning is coming in at 111.7 BCF/day. Demand is expected to rise to an average of 119.1 BCF/day over the coming 8-14 day period.
Low withdrawals are expected over the next few weeks. For the week ended Jan 13, stocks are seen drawing by 74 BCF. This would again be bearish compared to both last year’s draw of 156 BCF and the 5 yr avg draw of 203 BCF.
Natural gas prices closed down for a 4th consecutive week on Friday with the spot February 23 contract losing .291 on the week to settle at 3.419.
Over the past 4 weeks, the spot natural gas contract is down 3.181 or 48% dropping to a price level on Friday last reached in June 2021.
Prices have rebounded in today’s early trade testing 10 day moving average resistance at 3.725. There has not been a single daily close above this average since December 16th.
Last week’s 3.384 low is near term support followed closely by 3.320, the 78% retracement support from the June 2020 low up to the August 2022 high. If 78% support is reached and broken, the final 88% retracement at 2.464 will become the next downside support.
Relative Strength Index – 35.56
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