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Daily Natural Gas Market Update 11-22-24

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-20241122084651-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20241122084718-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Nat gas prices surged higher yesterday as colder weather forecasts led to a round of short covering while the season’s first storage withdrawal pushed prices even higher during afternoon trade.  The spot month gas contract ended Thursday’s session up 14.6 cents at $3.339, bringing the 2 day gain to more than 35 cents.

image 104285
Source: Bloomberg, CME

Anticipation of much colder temperatures for late November has been the primary driver of the recent rally as heating demand is projected to increase over the next 2 weeks.  
Res/comm usage is projected to surpass 40 BCF/day by late next week before topping out near 45 BCF/day during the first week of November.  This compares to the 7 day average of 26.3 BCF/day. 

image 104286​​​​
Source: Bloomberg

The EIA report revealed an unexpected storage withdrawal of 3 BCF for the week ended Nov 15, defying expectations for a small build.   Despite this draw, the 5 yr avg surplus rose for a 5th straight week while the year over year surplus narrowed.  Total gas in storage stands at 3.969 TCF with the 5 yr avg surplus now at 239 BCF and the year over year surplus at 141 BCF.  

For the week in progress, a build of 2 to 4 BCF is possible which would once again widen the 5 yr avg surplus.   

​​image-20241122092032-1
Source: Bloomberg

Nat gas prices have halted their 5 day rally this morning with prices trading 18 cents lower.  Production is heading back higher with the surplus still in place.

 

image-20241122084817-3
Source: Bloomberg, CME

Natural gas prices spiked higher for a 2nd day on Thursday on a combination of short-covering, end-user buying, and technical buying with the breakout above 3.000 resistance on Wednesday.

The December contract was up .146 (4.6%) on Thursday gaining .341 (11.4%) over the past two sessions to close Thursday at 3.339.

The December contract is currently down .150 or 4.5% trading near 3.185 after topping out at a 3.563 overnight high.  The overnight high came within .067 of 3.630 high set in November 2023.  The November 2023 3.630 high marked the high point for winter 2023-2024. 

Former June 2024 resistance at 3.159 broken on Wednesday is now near term support followed by 3.000-3.020.

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

Relative Strength Index - 62.72

image 104290
Source: Bloomberg, CME
image 104288
Source: Bloomberg, CME
image 104289
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 104291
Source: Bloomberg, CME
 
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