By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
After dropping mid week to 3 month lows, prices rose nearly 5% yesterday despite the EIA reporting the 2nd largest build of the season. Support stemmed from colder weather forecasts for mid to late October across the central and eastern US. Nov futures rose 30.6 cents to settle at $6.741.
Following last week’s injection of 129 BCF, stocks rose 125 BCF for the week ended Oct 7. Total gas in storage now stands at 3.231 TCF, 221 BCF lower than the 5 yr avg and 126 BCF below last year. The larger than normal build was due to mild weather and a boost in wind power last week that helped reduce power burn. The South Central region posted a record 55 BCF build while a 9% drop in LNG feedgas demand also supported the hefty addition.
Dry output last week increased by about 500 Mmcf/day week over week, averaging 97.1 BCF/day, according to Platts. Production is on track to hit record high levels this month.
The EIA forecasts dry production to average 97.56 BCF/day in Oct, up from Sep’s forecast of 97.09 BCF/day.
The November 22 natural gas contract had a wild trading session before finishing up .306 cents and settling at $6.741. More importantly, the $6.741 settlement was above both the 10-day moving average at $6.700 and the 200-day moving average at $6.72.
Early selling after another large injection evaporated by late morning.
The sell-off again bottomed near the low on October 3rd at $6.305, with today’s low at $6.337. This has been a big support level for the past week or so. The market held above 9-month trend line support for a fourth time this week and for a sixth time over the past two weeks.
The near-term trend is now higher but confirmation of a seasonal low needs to validated with a close above longer term resistance at last week’s 7.188 high. A breakout above 7.188 will turn the trend back higher.
Last week’s 6.305 low remains primary support. If broken, the downtrend will continue with the early-July 5.325 low becoming the next downside objective.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Following Index – Bullish
Relative Strength Index – 41.00
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