

An improving storage situation has helped weigh on nat gas prices, pushing the spot month below the $4 level. Position squaring ahead of tomorrow’s expiration and a warmer weather outlook heading into April added further pressure yesterday. Forecasts have been trending warmer this week, leading to a decline in HDD estimates and a subsequent drop in demand projections. The April contract settled 7.4 cents lower at $3.84.

Output levels fell yesterday to 105.4 BCF/day and are estimated this morning at 105.2 BCF/day. Pipeline maintenance and compressor restrictions are impacting production in the South and east Texas. Production is expected to average 105.3 BCF/day over the next week as seasonal maintenance continues. Output so far this month is still averaging 3.8 BCF/day above last year at 105.5 BCF/day.
The market is expecting another early season injection in tomorrow’s storage report. Platts is calling for a build of 32 BCF for the week ended Mar 21 which would be quite a deviation from both last year’s draw of 30 BCF and the 5 yr avg draw of 31 BCF. If correct, the 5 yr avg deficit would narrow to 127 BCF while the year over year deficit would stand at 562 BCF. Demand last week averaged about 700 MMCf/day lower than the previous week while production was near flat.
The deficit is expected to narrow again this week with estimates calling for a build of 18 BCF versus the 5 yr avg draw of 13 BCF.

After ticking lower early this morning, prices are trading higher on the day amid light volume ahead of tomorrow's roll off.
Technical Analysis

Late day selling on Tuesday broke tomorrow’s expiring April 25 natural gas contract under 40 day moving average support at 3.885 closing the day at 3.840, down .074.
Volume was very light at 50,899 contracts but volume tends to dry up ahead of month end futures expiration.
If the breakout under 40 day moving average holds, the trend will have turned down in typical post-winter seasonal weakness.
The 38% retracement of the 2024-2025 uptrend at 3.380 becomes the next downside objective for the spot contract which will become May25 on Friday.
The 40 day moving average broken as support on Tuesday is now near term resistance at 3.885 followed closely by the 10 day average at 4.005. 10 and 40 day moving average alignment appears ready to turn into a bearish alignment.
The long term trend following index is now in a bearish alignment along the short term index. The long term, short term, and daily RSI indexes are all showing bearish divergences (new price high, lower index high). While not outright sell signals, they typically appear near market highs.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 43.88






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