A massive storage withdrawal for the first week of December helped propel the nat gas market Thursday. The pull led to a significant drop in the surplus. Prices traded as much as 19 cents over the previous day’s settle but moderated later in the session. The prompt month end with a 7.7 cent gain, settling at $3.455.
The EIA reported a larger than expected and much larger than normal withdrawal of 190 BCF for the week ended Dec 6. This is about 10% of what we normally withdraw from storage during heating season. The pull was more than 2 ½ times the size of both last year and the 5 yr avg draws of 72 BCF and 71 BCF, respectively. Total working gas stocks now stand at 3.747 TCF, 67 BCF above last and 165 BCF above the 5 yr avg. A draw of 60 BCF was reported for the Midwest, leaving stocks there 2% above the 5 yr avg while stocks in the South Central region fell 59 BCF.
For the week ending Dec 13, estimates are projecting a smaller draw of 130 BCF which would further narrow the surplus while dropping supplies to 3.617 TCF.
Gas flows to LNG export plants are on track to reach an 11 month of 14.6 BCF today, up 1.7 BCF/day from yesterday. Plaquemines LNG appears on track to pull in about 0.16 BCF/day today, up from Thursday’s 0.10 BCF/day. It has been said that once the facility pulls in about 0.15 BCF/day or higher, it likely means the plant is pulling in enough gas to run at least one block of 2 liquefaction trains. Today’s increase is also due to feedgas demand at Sabine Pass reaching a 13 month high of 5.2 BCF/day.
Prices are currently trading more than 10 cents lower on the day. Production is seeing an increase this morning of 0.8 BCF/day, leaving output at 104.6 BCF/day. Weather outlooks also suggest that the round of cold for the upcoming 6-10 day period will evaporate by the 11-15 day period.
The January 25 natural gas contract rallied up to 3.559 high on Thursday before pulling back into the close to settle the day at 3.455, up .077.
Volume was extremely heavy registering the 2nd highest daily volume of the year of 328,089 contracts. The heaviest volume day was in early-January when the market when was setting a high.
Yesterday’s volume spike could mark a “blow off” top for this current rally.
Yesterday’s 3.559 high was technically important as it came with a few ticks of the 3.563 high set two weeks ago. A double top reversal may be forming.
In order to trigger the reversal, a drop under last week’s 2.977 low is needed.
The 10 day moving average at 3.205 is near term support followed by 2.977-3.000.
A breakout above yesterday’s high will negate the double top turning the November 2023 high at 3.630 into the next area of resistance.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 60.85
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