Nat gas prices traded both sides of unchanged Friday with the massive decline in storage levels providing support while rebounding production lent pressure. The return of output along with fading weather demand during the first 10 days of February ultimately won out. March futures settled 0.3 cent lower at $3.044.
Production levels have quickly rebounded following winter storm Enzo, which continued to apply downward pressure to the market on Friday. Output for Friday was estimated at 105.1 BCF/day, up from last Monday’s 102.5 BCF/day.
Production levels rose further over the weekend, topping out at 105.6 BCF/day. We are seeing a slight decline this morning with output estimated at 105 BCF/day. Platts predicts output will remain elevated over the next 2 weeks, averaging 105.3 BCF/day.
Following the coldest January since 2014, February is getting off to a warmer start. The next 5 days will see extreme warmth across a major portion of the US, with the largest deviance from normal in the South Central region. Temps will turn cooler during the 6-10 day period, falling to below and much below normal levels across the NW and North Central US. The coverage of below normal readings expands to cover nearly the entire country in the 8-14 day period with the exception of the SE. The North Central US will see the coldest conditions relative to normal.
The cooler changes have resulted in a net gain of 31.7 HDDs in this morning’s outlook from Maxar, marking the largest daily/weekend change so far this season.
Gas prices have surged higher this morning as forecasts turn colder, particularly during the 8-14 day period, as well as on worries over supplies from Canada after Trump followed through with imposing tariffs over the weekend. Energy imports from Canada are facing a 10% tariff. Nearly 9%, or 8.4 BCF/day of gas consumed in the US during 2024 came from Canada.
Technical Analysis
The new front month March 25 natural gas contract was heavily sold in last week’s trade losing .406 (11.7%) over the course of the week to close Friday at 3.044.
The March contract has gapped higher by .186 to begin the new week of trade after failing to push under 3.000 support on Friday.
The gap created last week during expiration of the February 25 contract has been fully closed with trade up to the 3.310 level overnight.
If buying continues, 3.560-3.610, the area 10 and 40 day moving averages have converged, will become the next area of resistance.
Current strength is viewed as an upside correction within a greater downtrend. Once current strength ends, renewed selling is expected.
2.990-3.000 is near term support followed by 2.925, the 50% retracement support of the 2024-2025 uptrend. Longer term support is at 2.500-2.600.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -43.60
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