

Spot month gas prices sank 8.2% to start the new week. Weather was the driving force behind the loss as models over the weekend turned more bearish, slashing demand expectations. Confirmation of a mild start to February, combined with a recovery in output, also contributed to yesterday’s retreat. Tomorrow’s expiring Feb contract settled 33 cents lower at $3.697.

Maxar’s outlook for the coming 15 days period shed about 20 HDDs, suggesting limited demand into the first week of Feb. Warmer changes were noted in the Eastern US during the 1-5 and 11-15 day periods while the south trended warmer during the 6-10 day period. The 15 day forecast as of yesterday totaled 402.8 HDDs which is lower than normal but still well above the record low of 320 HDDs during the same time last year.
Production levels are steadily increasing after freeze offs across the Permian, Haynesville and Appalachia regions cut output by nearly 7 BCF/day. Almost all the curtailed output hads been restored as of yesterday with production estimated at 104.1 BCF/day. The rise in output comes even as the nat gas rig count indicates reduced activity. Friday’s data showed the rig count down 4 rigs week over week.

LNG demand is rising with feed gas nominations near 14.9 BCF/day on Monday. Freeport LNG has resumed liquefaction operations following last week’s shutdown with feed gas flows there back at pre outage levels of about 2 BCF/day.
Demand outlooks were clouded yesterday by reports that China’s DeepSeek AI model appeared to be more efficient than US AI models. This caused fear that less gas would be needed to power AI data centers.
The downward trend remains intact this morning with the spot month down another 15 cents.
Technical Analysis

Monday’s session began with a gap lower open by tomorrow’s expiring February 25 contract which was well sold into the close. By day’s end, the February contract had lost .330 (8.2%) to settle at 3.697.
Volume was very low at 66,940 contracts likely indicating liquidation of existing long positions rather than new shorts entering the market.
40 day moving average support which held on Monday has been broken overnight at the 3.600 level. A close under the 40 day average should indicate a winter high has been set.
A close under the 40 day moving average will turn 3.410 into the next area of support. 3.410 is the 38% Fibonacci retracement from the 2024 low up to the 2025 high.
If 3.410 support is reached and broken, the lower-3.000 area will become the next longer term support.
Yesterday’s high at 3.827 is near term resistance followed by 4.000 which will close the gap created on Monday’s open.
Moving Average Alignment – Neutral - Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -45.55






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