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Daily Natural Gas Market Update 12-26-24

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-20241226072222-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Commodity Indicator
image-20241226073243-1
 
Source:  StoneX Commodity Indicator (1), Bloomberg
Fundamentals & Weather

Spot month futures surged higher in Tuesday’s shortened session on fears of possible freeze offs during early January.  Weather models also hinted at another round of arctic cold during the 2nd week of January.  Prior to that, temps will be unseasonably warm thru Jan 1, resulting in lower heating demand. Light volume ahead of tomorrow’s expiration added to price volatility. The Jan contract settled 29 cents higher at $3.946.

image 105910
Source: Bloomberg, CME

LNG feedgas was estimated Tuesday at 14.6 BCF/day and is pegged this morning at 14.8 BCF/day.  Month to date, feedgas demand is averaging 14.2 BCF/day,  about 0.7 BCF/day higher than November.  

Helping drive the recent upside in LNG exports was the startup of liquefaction operations at Plaquemines, which continue to ramp up.  Repairs to Calcasieu Pass LNG terminal helped further lift feedgas flows over the holiday as the terminal’s 4th liquefaction block was to authorized to start receiving feedgas again. 

image 105909​​​​
Source: Bloomberg

Total consumption is estimated today at 124.3 BCF/day, down 2.7 BCF/day.  The decline is mostly due to lower heating demand, which is off 3.1 BCF/day at 38.4 BCF/day.   Heating needs over the next week are expected to drop by 5.6 BCF/day to an average of 32.8 BCF/day.  With colder weather moving in early next month, res/comm usage is projected to rise to an average of 40.7 BCF/day during the 8-14 day period. 

​​image 105911
Source: Bloomberg

Nat gas prices are seeing a significant pullback this morning after trading at the $4 level overnight.  The spot month is currently down nearly 6.5% as is the Feb contract. There is some doubt over the intensity of the looming cold spell while production levels have ramped up, coming in this morning at 103.9 BCF/day. 

Weekly storage data will be released on Friday at 9:30 am CT.  Estimates call for a draw of 97 BCF which compares to last year's pull of 87 BCF and the 5 yr avg pull of 127 BCF.

 

image-20241226072539-2
Source: Bloomberg, CME

The January 25 natural gas contract was up sharply on Tuesday ahead of the Christmas holiday gaining .290 or 7.9% to close the day at 3.946, a new 23-month high.

Pre-holiday volume was very low at 66,852 contracts.  

The January contract is currently down .210 trading near 3.730 after topping out at a 4.010 overnight high.  The overnight high is technically important as it came near the same level the market topped in December 2016 at 3.994.

Daily continuation chart 10 day moving average support is at 3.530 today which coincides with former double top resistance at 3.559-3.563 and will be an important support area if reached.

If 10 day moving average support is broken, the near term trend will turn back down with the 40 day moving average at 3.140 becoming the next area of support.

If the rally continues, a breakout above 4.010 resistance will turn the November 2014 weekly high at 4.544 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 - 61.73

image 105912
Source: Bloomberg, CME
image 105914
Source: Bloomberg, CME
image 105913
Source: Bloomberg, CME
image 104801
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 104800
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 105915
Source: Bloomberg, CME
 
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