Production levels are averaging 103.8 BCF/day this month in response to a seasonal demand increase. Producers are expected to raise production levels next year, however the timing and volume will be largely dependent on the severity of winter conditions. Increasing LNG export demand will also intensify the need for expanded production in the coming year. Output has already increased to 103 BCF/day season to date, up from the Sep/Oct average of 101.8 BCF/day. Today’s output is estimated at 103.5 BCF/day, up 0.5 BCF/day from Monday.
Cheniere Energy has received the green light to introduce feedgas to the first liquefaction train of its expansion at the Corpus Christi export terminal. This expansion, along with Plaquemines which is preparing to export its first cargo, is expected to increase feedgas demand through next year into 2026.
Feedgas demand has been strong, averaging about 14.8 BCF/day over the past week. Total LNG flows hit an annual high of 15.2 BCF/day on Dec 20. Platts estimates feedgas demand this morning at 14.6 BCF/day, on par with yesterday’s level.
European gas prices are up slightly as uncertainty remains over Russian gas flows when the Ukraine gas transit deal expires at the end of the year. Low wind generation in some EU countries has also been supportive. EU gas stocks are just over 75% full which is slightly below their 2 yr avg but within normal range.
Weekly storage data is expected to show a withdrawal of 101 BCF for the week ended Dec 20. This would exceed last year’s withdrawal of 87 BCF but would fall short of the 5 yr avg pull of 127 BCF. If correct, the surplus would widen for the first time since late November.
Nat gas prices continue to surged higher today as the market weighs the potential effects of colder weather expected next month. The severity and duration of the colder conditions will influence the trajectory of the rally.
The January 25 natural gas contract traded in a fairly wide .363 range on Monday alternating between a 3.944 morning high and a 3.581 low before setting the day at 3.656, down .092 (2.4%).
Monday’s 3.581 low is technically important as it came above former double top resistance at 3.559-3.563 which is now near term support.
With support holding on Monday, prices have reversed back higher to begin today’s new day of trade.
Monday’s 3.944 high extending up to 3.994 (December 2016 high) remains primary resistance. If broken, the November 2014 high at 4.544 will become the next area of resistance.
3.559-3.563 remains primary support followed by the 10 day moving average at 3.480. Long term 40 day moving average support is currently at 3.105.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 66.48
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