

Dec futures ended lower on its first day as prompt month amid expectations for a bearish inventory report and forecasts calling for a continuation of mild weather. Production levels have been above 102 BCF/day this week while demand levels have tanked. Dec futures settled 1.4 cents lower at $2.845.

Weather outlooks continue to offer little support. Maxar’s latest 30 day outlook for November saw additional warm changes from the Plains to Midwest, South and Interior East. Their HDD forecast fell by 20 with the resulting 480 HDD forecast ranking 7th warmest since 1950. The first half of November is expected to feature widespread above to much above normal temps across the East and below normal temps across the West. This follows extreme warmth throughout October, which expected to rank 3rd warmest on record with a total of 194 HDDs and 98 CDDs.
Surpluses are widely anticipated to increase over the coming weeks due to recent and ongoing mild temperatures. This is a bearish change from the 14 straight weeks in which the surplus declined due to reduced drilling. Today’s storage report is expected to show stocks rose 82 BCF in the week ended Oct 25. This compares to last year’s build of 77 BCF and the 5 yr avg build of 67 BCF. If correct, stocks would rise 3.867 BCF. Early estimates for next week’s report suggest a build of 67 BCF which compares to last year’s 19 BCF build and the 5 yr avg build of 32 BCF.

Prices this morning are lower as weather models further slashed HDDs estimates overnight while the 5 yr avg surplus is likely to grow by about 15 BCF. Production levels are down on the day at 101.1 BCF/day while demand has is coming in 5.7 BCF higher on the day.

The new front month December 24 natural gas contract traded flat on Wednesday closing the session at 2.845, down .014.
The trend remains sideways to down with the 2024 contract low for the December contract at 2.712 being near term support.
If 2.712 support is broken, 2.570-2.580 will become the next area of support. Longer term support is the bottom of the open gap created during expiration of the November 24 contract on Tuesday at 2.390.
Daily continuation chart trend line resistance drawn above three 2024 highs is currently at the 2.980-3.000 level. As long as the December contract holds below this resistance, the trend will remain sideways to down.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 60.17






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