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Daily Natural Gas Market Update 11-21-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20241121083828-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20241121083845-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

The spot month nat gas contract soared higher Wednesday, extending the rally for a 4th straight session.   Prices climbed on expectations for stronger demand as a much colder weather pattern begins to take hold late Nov into early December. The Dec NG contract settled yesterday’s with a 19.5 cent gain at $3.193.

image 104231
Source: Bloomberg, CME

Yesterday’s outlook from Maxar showed a much colder end to November.  Despite this, the month is still on track to rank 5th warmest with 468 HDDs. Their outlook for December trends much colder across the East with above normal readings reduced to the southern US.  The month will start off colder than normal with widespread below to much below normal temps across the eastern 2/3.  An additional 30 HDDs were added in, leaving HDDs expectations at 820 which falls between the 10 and 30 yr norms but is much higher than last year’s 668.1.

image 104232​​​​
Source: Bloomberg

The market is likely to see the season’s last injection in this morning’s.  The EIA is expected to show a build of 6 BCF for the week ended Nov 15.  This compares to last year’s injection of 12 BCF and the 5 yr avg withdrawal of 16 BCF.  The supply/demand balance tightened last week by nearly 7 BCF/day as production fell 800 MMcf/day while heating demand rose 6.5 BCF/day week over week. 

With a colder pattern emerging,  we could see larger than normal withdrawals quickly develop. Early estimates for next week’s report range suggest a drawdown of 3 BCF, which compares to a 5 BCF build last year and a 5 yr avg draw of 30 BCF. 

​​image 104233
Source: NOAA

LNG feedgas demand remains supportive despite a downtick yesterday to 13.6 BCF/day.  Feedgas demand is back up this morning at 13.8 BCF/day.  LNG demand is likely to continue growing heading into winter, especially as Europe braces for colder winter conditions.  Exports will also get a boost once Plaquemines and Corpus Christi’s Stage 3 come online. 

Nat gas prices have thrusted higher this morning in response to weather forecasts with the Dec contract trading 20 cents higher.  The NWS outlooks seem to now be more in line with Maxar as they have added in more cold over the next 2 weeks.  This is especially the case for the 8-14 day period which now shows below normal readings across nearly the entire US.

 

image-20241121083936-3
Source: Bloomberg, CME

A very bullish breakout in the natural gas market on Wednesday as the spot December 24 contract was finally able to break out and close above lower-3.000 resistance.

The December contract gained .195 on Wednesday closing at 3.193, the 2nd highest close so far in 2024.  Volume was strong at 225,693 contracts.

The October 2024 high at 3.159 was broken on Wednesday turning the January 2024 high at 3.392 into the next area of resistance.

The January high is currently being tested on overnight buying.  If 3.392 resistance is broken, the November 2023 high at 3.630 will become the next upside objective.

The lower-3.000 level is now primary support followed by the 10 day moving average at 2.960.

Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish

Relative Strength Index -70.00

image 104236
Source: Bloomberg, CME
image 104234
Source: Bloomberg, CME
image 104235
Source: Bloomberg, CME
image 103919
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 103918
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 104237
Source: Bloomberg, CME
 
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