By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
Spot month gas prices sank Monday as weather forecasts pointed to much more mild conditions and lower demand following the upcoming arctic cold blast. For late Dec/early Jan, warmer trends could occur more quickly mid to late in the 2 week period from the Rockies to the Plains and Midwest. Jan futures settled down 74.9 cents at $5.851.
Demand levels this morning are down across all sectors, leaving total usage at 131.5 BCF/day. The advancement of arctic cold later this week into the upcoming weekend will boost demand up to an average of 139.5 BCF/day over the next week.
Given expectations for a warm up heading into early Jan, national demand should drop to very moderate levels during the 8-14 day period. Platts is projecting an average of 114.2 BCF/day.
Prices continue to tumble this morning as temps post Christmas have moderated substantially. Prior to the warm up, we will still endure some extreme cold across the East during the 6-10 day period.
Today’s outlook trends even warmer than yesterday, with the 11-15 day period featuring widespread coverage of above normal temps. Much above normal temps are now expected across the Eastern US while the West will see normal to above normal temps throughout the period.
The spot January 23 natural gas contract gapped under 10 and 40 day moving average support to begin Monday’s trade and was heavily sold into the close.
By day’s end, the contract had lost .749 or 11.3% to close the day at 5.851.
Continued selling today has dropped the January contract under 5.700-5.740 support turning the early-December 5.337 low into the next area of support.
Longer term support is a trend 2 ½ year trend line which held in October at 4.750 and is currently near 4.900.
Relative Strength Index – 41.09
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