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Daily Natural Gas Market Update 11-7-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20241107084835-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20241107084851-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Nat gas prices ended Wednesday’s session higher with much of the day’s gains occurring in the afternoon following news of a pipeline inspection  that would continue through December.  A rally across many US markets following the election provided further support.  Dec NG settled 7.7 cents higher at $2.747.

image 103487
Source: Bloomberg, CME

A seasonally strong build of 65 BCF is expected for the week ended Nov 1. This would outpace both last year’s build of 19 BCF and the 5 yr avg build of 32 BCF.  Early estimates for the week in progress suggest a build near 49 BCF which would continue to widen the surplus given the 5 yr avg injection of 29 BCF. 

image 103539​​​​
Source: Bloomberg

Nat Gas Pipeline Co said it plans to conduct inspections on the Louisiana No. 1 Line, which supplies gas to South Louisiana.  The inspections could result in remediation work and possible force majeure restrictions.  Maintenance work continues on the Permian Highway Pipeline, cutting eastward Permian Basin capacity by about 1.2 BCF/day for 2 weeks. Supply could be at further risk by Hurricane Rafael, which made landfall yesterday in Cuba as a Cat 3.

 

​​image 103540
Source: Bloomberg

As of this morning, Rafael has moved into the Gulf and is expected to turn westward today and tomorrow.  The storm is expected to weaken as it crosses the central Gulf, with continued uncertainty regarding its track.  

The continued warm pattern across the East and above normal storage expectations are currently driving the market lower. 

 

 

image-20241107084942-3
Source: Bloomberg, CME

The December 24 natural gas contract turned back higher on Wednesday following Tuesday’s sell off gaining .077 to close the day at 2.747.

The December contract has been bullishly consolidating above 10 and 40 day moving average support this week.  A bullish key reversal (new contract low followed by higher close) was also posted on Monday on the December 24 daily chart but follow through buying so far has been limited.

2.818 is weekly high resistance followed by 2.970-3.000 which is three point trend line on the daily continuation chart beginning at the January 2024 high.  A breakout above 3.000 is needed to turn the longer term trend back up.

10 day moving average support is at 2.635 today followed by the 40 day average at 2.580.  A close under 2.580 will turn 2.390 into the next area of support.  2.390 is the bottom of the open gap created last week during expiration of the November 24 contract.

Moving Average Alignment – Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish

Relative Strength Index - 55.35

image 103543
Source: Bloomberg, CME
image 103541
Source: Bloomberg, CME
image 103542
Source: Bloomberg, CME
image 103311
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 103312
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 103544
Source: Bloomberg, CME
 
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