Forecasts for a round of extreme cold this week along with near record high LNG exports helped pave the way higher last week. Thursday’s storage report provided additional upward momentum. Settling higher throughout last week’s trade, the March NG contract gained 41.6 cents week over week. The spot month settled Friday’s trade 9.7 cents higher at $3.725.
Consumption levels have spiked over the past several days, estimated this morning at 161.6 BCF/day. Extreme cold has moved into the eastern 2/3 of the US, pushing heating demand up nearly 10 BCF/day since Friday. Res/comm usage is estimated today at 60.2 BCF/day versus Friday’s 50.6 BCF/day. Power burn has also risen from Friday’s 33 BCF/day to 38.3 BCF/day as of this morning. LNG feedgas demand is currently at 15.9 BCF/day, leaving the month to date avg at 15.3 BCF/day, up from the Feb24 avg of 13.7 BCF/day.
Frigid temps will remain in place this week however big changes are on the way. Weather patterns have turned much warmer since Friday’s outlook across the eastern 2/3 of the US with the biggest change expected across the Mid-Atlantic. The 6-10 day period features a major pattern change as Arctic blocking breaks down. A significant warm up will begin Sunday and remain in place through next week with lows in the 30’s and highs in the 40’s.
The 11-15 day period features above normal temps from the Interior West to the Central US while the East is expected to average normal to below normal.
Profit taking this morning is pushing prices lower as warmer weather will soon replace subzero lows across the Central US. The question remains whether an expected widening of the storage deficit over the next few weeks and record high LNG exports will overshadow weather.
Technical Analysis
The March 25 natural gas contract gapped lower by .111 in today’s early trade after closing Friday at 3.725. In last week’s trade, the March contract was up .416 (12.6%) while closing up for a 2nd consecutive week.
The March contract broke out above 40 day moving average resistance in last week’s trade but is currently trading back under this support, now resistance, at 3.620 today.
The next level of support is the 10 day moving average currently at 3.485. A close under the 10 day moving average should lead to another retest of 2.990-3.000 support.
2.990-3.000 is weekly low support and the 50% retracement of the 2024-2025 uptrend. A close under 2.990 will turn the 61.8% retracement at 2.660 into the next area of support.
The top of the overnight gap at 2.720 is near term resistance followed by last week’s 3.801 high. Longer term resistance is at 4.000.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -52.76
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