

After trading lower much of yesterday’s session on mild weather, late day support emerged after 2 major E&P companies released Q3 earnings. Due to current market conditions, Expand Energy indicated plans to scale back drilling and hold output flat next year. After falling to a near 2 month low amid light volume, the November contract went off the board yesterday at $2.346, up 3.7 cents from Tuesday’s settle. The new spot month Dec contract settled less than a penny lower at $2.859.

The market is bracing for another above normal storage injection for the week ended Oct 26 amid mild weather, low demand and rising output. Platts is calling for a build of 82 BCF while Reuters is forecasting an injection of 76 BCF. Either way, the number would exceed the 5 yr avg build of 67 BCF and last year’s build of 77 BCF. Early estimates for the week in progress suggest a 3rd straight above normal build, around 64 BCF which compares to last year’s build of 19 BCF and the 5 yr avg build of 32 BCF.
Fall weather conditions have so far not delivered the cold temps needed to create a significant and lasing increase in demand. Usage is likely to remain subdued into the first half of November as forecasts indicate an extended mild weather pattern. With current readings averaging much warmer than normal across the Midwest and East, demand levels yesterday indicated a lighter heating load with res/comm usage estimated at 14.6 BCF/day, down 1.8 BCF/day from Monday. Power sector demand was about flat on the day at 33.7 BCF/day.

Prices are lower this morning as res/comm usage falls another 1.9 BCF/day while the market awaits output plans from EQT Energy.

The November 24 natural gas contract which expired on Tuesday’s close settled .510 under the price of the new spot December 24 contract creating a massive downside gap on the daily continuation chart.
This gap is between 2.390-2.820 which is the current overnight low for the December contract which settled Tuesday at 2.859.
With the December contract trading just under three point trend line resistance at the 3.000 level, there is a good chance the price of the December contract will begin to weaken in upcoming trade.
2.712 is the 2024 low for the December contract and is near term support followed by 2.570-2.580. Longer term support is the bottom of the open gap at 2.390.
Longer term, the trend at this point remains sideways to down with the lower-3.000 area expected to remain primary resistance.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 60.65






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