Following a volatile, post report trade, spot month gas prices settled Thursday’s session with a small decline. A lower than expected withdrawal last week indicated less demand than thought, helping push the market lower immediately following the report’s release. Those losses eventually dried up by the close. Feb futures settled 1.5 cents lower at $3.945.
The EIA reported a lower than expected withdrawal of 223 BCF for the week ended Jan 17, leaving total gas in storage at2.892 TCF. The draw did still greatly exceed the 5 yr avg comparison which helped narrow the surplus to 21 BCF. The pull fell short of last year’s 277 BCF draw, leaving the year over year deficit at 57 BCF.
Next week’s report is expected to approach, or potentially exceed, the largest draw on record of 359 BCF. Expectations currently range from 340 to 360 BCF. End of season storage levels are projected to be in the 1.6 to 1.7 BCF range, lower than last year’s 2.3 TCF.
LNG feedgas demand continues to be affected by issues at Freeport LNG with flows there still running well below normal. It appeared operations had partially resumed yesterday before being revised lower to about 190 MMcf/day with deliveries near zero the prior 2 days. Maintenance work at both Corpus Christi and Sabine Pass was another factor in yesterday’s decline. Feedgas demand yesterday fell to a 9 month low of 10.3 BCF/day, well under the month to date avg of 14.6 BCF/day. As of this morning, feedgas demand is stronger at 14 BCF/day.
With freeze offs easing, production levels have been steadily increasing since dropping to 95.2 BCF/day on Tuesday. Improvements in the East, Midcon and Texas are driving the daily increases. As of this morning, production has recovered to 101.7 BCF/day.
Prices are trading lower this morning as output improves while weather models for the first week of February have shed a few HDDs. The spot month is currently down 10 to 11 cents.
Technical Analysis
The February 25 natural gas contract failed to extend Wednesday’s bullish reversal in Thursday’s session.
Several rally attempts on Thursday above the 4.000 level were quickly sold back down with the February contract finishing the day at 3.945, down .015.
The February contract also closed under 10 day moving average support which has been followed by renewed selling into today’s trade.
Weekly low support is at 3.711 followed by the 40 day moving average at 3.580.
The 10 day moving average is now near term resistance at 3.950 followed by Thursday’s 4.048 high. Longer term resistance is at last week’s 4.369 high.
Moving Average Alignment – Neutral - Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -52.62
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