By: Heather Wine, Senior Risk Manager - Energy
The March contract debuted with a 5% increase following a larger than expected storage withdrawal, a rebound in LNG feedgas demand and forecasts for strong near term demand. The spot month settled 18.6 cents higher at $3.918.
Intense cold is forecast to linger through the weekend into early next week across the Eastern US as another storm hits the East Coast. Temps as much as 15 degrees below normal are projected along portions of the East Coast and in FL over the next 5 days. The cold will remain focused on the Midwest and East during the 6-10 day period while the West averages much above normal.
Stocks fell by a larger than expected 242 BCF during the week ended Jan 23, leaving total gas in storage at 2.823 TCF. The number also outpaced the 5 yr avg draw of 208 BCF, leaving the 5 yr avg surplus at 143 BCF but fell short of last year's 307 BCF pull. The South Central region posted the biggest decline of 89 BCF.
Forecasted withdrawals over the next 2 weeks are exceptionally large, possibly topping out around 688 BCF. Next week’s report will reflect the coldest period of the recent Arctic blast that knocked production offline and sent demand levels soaring. The number is likely to challenge the record high withdrawal of 359 BCF.
Production levels continue to improve following weather induced shut ins although levels still remain short of winter highs near 110 BCF/d. Output is estimated this morning at 106.1 BCF/d.
Rising supply is being partly offset by growing LNG flows which have recovered to 18.1 BCF/d as of this morning.
Source: StoneX
The new front month March 25 natural gas contract gained .186 or 5% on its opening day of trade on Thursday closing the session at 3.918.
The trend remains up with weekly high resistance at 4.000 broken in Friday’s early session.
This turns a two-point trend line beginning at the 4.811 March 2025 high currently at the lower-4.200 area into the next upside objective.
A breakout lower-4.200 resistance would be another bullish technical signal with 4.320-4.330 becoming the next area of resistance.
If trend line resistance is reached and holds, a downside retracement in a retest of support should follow given the March contract has risen by 1.250 or 46% over the past 10 session.
Moving Average Alignment - Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 46.65
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