

Yesterday’s storage report proved bullish by historical standards, helping further widen the inventory deficit. The market however looked past the report, focusing instead on a more mild weather pattern for late Feb into early March. Weather models also removed some HDDs for early March with demand levels expected to plunge. Ending a 7 day winning streak, the March contract settled 12.8 cents lower at $4.152.

The EIA reported a 196 BCF withdrawal for the week ended Feb 14, leaving total in storage at 2.101 TCF. Given last year’s draw of just 58 BCF and the 5 yr avg draw of 145 BCF, the year over year deficit is now 386 BCF while the 5 yr avg deficit grew to 118 BCF. Looking ahead to next week’s report, another triple digit draw is expected given this week’s surge in demand and production freeze offs. Estimates suggest a draw between 230 and 290 BCF, well above last year’s draw of 86 BCF and the 5 yr avg draw of 141 BCF.
Year to date, withdrawals have totaled 1.31 BCF versus the 5 yr avg drawdown of 1.04 TCF. Heating season is projected to conclude near 1.61 BCF which would be 240 BCF lower than the 5 yr avg.
Daily demand levels are projected this morning at 160.1 BCF/day, down from Wednesday’s peak of 172.4 BCF/day. Over the next week, consumption is seen dropping 30 BCF/day to an average of 129.4 BCF/day. Lower res/comm usage is the driving factor behind this decline with the 7 day avg estimate at 37.4 BCF/day, well below this week’s high of 61.1 BCF/day.
LNG exports continue their uptrend, coming in this morning at an estimated 16.5 BCF/day. Month to date, feedgas demand is averaging 15.5 BCF/day, up 1.9 BCF/day from Feb 2024.

Production freeze offs were estimated around 6 BCF/day on Thursday but this should improve over the next few days. Output this morning is already coming in stronger by 0.6 BCF/day at 102.6 BCF.
Prices are trading higher this morning after weather models added more HDDs back into the forecast for the Mar 5-8 period. The additional cold is sparking fears over a further tightening in the supply/demand balance.
Technical Analysis

The March 25 natural gas contract rallied up to a new 2+year high at 4.467 in Thursday’s early trade but closed .128 lower settling the day at 4.152.
A potentially bearish dark cloud cover Japanese candlestick formed on Thursday but will need to see follow through selling today for confirmation.
4.000 is near term support followed by the 10 day moving average at 3.780 and the 40 day average at 3.700. 10, 40 and 200 day moving average alignment is now bullish.
A breakout above Thursday’s 4.476 high will turn the November 2014 high at 4.544 into the next area of resistance. Longer term resistance is the November 2018 high at 4.929.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -63.11






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