By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
Easing demand expectations amid a big shift in weather forecasts along with another delay in the restart of Freeport LNG pushed nat gas prices to a 9 month low during Monday’s trade. The Jan contract fell more than 11% yesterday, settling at $5.577, down 70.4 cents.
Freeport confirmed another delay in its restart last week, now to year end. The latest news marks the 3rd delay to its restart timing, leaving more gas available for the domestic market. This latest delay comes as other supply/demand factors weigh on market sentiment.
LNG feedgas demand is currently at 11.5 BCF/day. According to Platts, it will maintain this level over the next 2 weeks.
Weather forecasts for early December shifted largely warmer last weekend. While widespread, the changes were most significant from the Plains to the East, resulting in a loss off 43 HDDs since last Friday. As of yesterday, Maxar predicted a total of 367.8 HDDs over the next 15 days, which is well below the 30 yr norm but in line with the 10 yr norm.
While unseasonably warm temps are expected across the South and East this week, the warmth will dissipate by mid to late Dec as below normal temps usher into much of the country.
Europe is expected to see its first artic blast of the season next month as a Greenland blocking is projected to form late next week. Temps will plunge across northern Europe, putting their power supplies to the test.
Prices are adding onto yesterday's losses this morning with Jan futures trading 5-10 cents lower this morning.
The collapse in natural gas prices continued on Monday as the January 23 contract gapped under 40 day moving average support in early trade and was heavily sold into the close.
By session’s end, the January contract had lost .704 or 11.2% to close the day at 5.577.
Over the past 8 sessions, nearly 80% of the gains made from the October 4.750 low up to the November 7.604 high have been erased.
The 78% Fibonacci retracement of the October-November uptrend has been reached overnight at 5.380.
If the 78% retracement fails to hold, the final 88% retracement at 5.090 will become the next area of support.
The lower-5.700 area is near term resistance followed by the 40 day average at 6.160.
Long term trend line support which begins at the June 2020 low which held in October at 4.750 is currently near 4.850.
Relative Strength Index – 39.40
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