By: Heather Wine, Senior Risk Manager - Energy
Forecasts for rising temperatures and seasonally strong demand helped push nat gas prices higher to start the week. Additional strength stemmed from short covering after the market began to rally mid morning. Oct futures settled 10.2 cents higher at $3.043.
Monday’s outlook from Maxar showed a warmer than normal pattern over the latter half of September with the 15 day period featuring 98.5 CDDs. While in line with the 10 yr avg, it would rank 8th warmest for the period but still slightly cooler than the same time last year, which totaled 105.5 CDDs.
The Midwest trends warmer once again in this morning’s forecast, featuring widespread above normal temps during the 6-10 day period. Warmer than normal readings remain in place across the East during the 11-15 day period.
LNG feedgas remains steady at 15.7 BCF/day. Cove Point LNG began 3 weeks of planned maintenance yesterday which is expected to weigh on overall feedgas demand. While flows are down from recent highs, they remain above year ago levels by 2.6 BCF/day.
Power burn has been trending higher given the rise in temperatures. Cooling demand is estimated this morning at 42.4 BCF/day, up 0.5 BCF/day.
Demand is expected to remain stronger than normal over the next week as readings climb into the mid 80s to upper 90s across most of the interior US. Above normal readings this time of year however do not carry the same impact as they do during the peak of summer.
Prices are higher this morning with the spot month currently up about 2.5 cents given stronger demand expectations this week.
A volatile overnight session in the natural gas market. After closing Monday at 3.043, up .102, the spot October 25 natural gas contract spiked down to a 2.869 low on the overnight open.
From the 2.869 low, the October contract rallied up to a 3.109 high before pulling back to the current 3.050 level.
The October contract closed above the 10 and 40 day moving averages on the daily continuation chart which is a supportive factor heading into today’s session.
Trend following indicators are also in a bullish alignment but rally attempts continue to get sold down.
The 3.109 overnight high is near term resistance followed by last week’s 3.198 high.
A breakout above 3.198 will turn the 200 day moving average at 3.490 into the next aera of longer term resistance.
10 day moving average support is at 3.040 today followed by the 40 day average at 2.970. The overnight 2.869 low is now weekly low support.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 55.00
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