

Spot month gas prices settled higher Wednesday, trading at 1 week highs as stronger demand overshadowed higher output level. March futures settled 10.7 cents higher at $3.36.
Today’s storage report is expected to show a draw of 168 BCF for the week ended Jan 31. This compares to last year’s draw of 110 BCF and the 5 yr avg draw of 174 BCF. Early estimates for next week’s report suggest a much smaller pull near 106 BCF which would once again exceed the year ago draw of 60 BCF but would exceed the 5 yr avg draw of 144 BCF.

Production levels have been robust so far this month, averaging near 106 BCF/day. This is up nearly 3 BCF/day from the 30 day avg and close to near record highs.
LNG feedgas demand remains elevated, near last month’s seasonal highs, with exports to Europe accounting for much of the recent demand. During January, EU demand accounted for more than 80% of total US LNG cargoes. The stronger than normal demand is tied to quickly depleting European storage levels. Continued winter demand there likely to keep LNG flows strong. LNG flows are estimated at 15.4 BCF today and are projected to average 15.2 BCF/day over the next 2 weeks.
Total demand has fallen 8.5 BCF/day as of this morning with a 7.2 BCF/day loss in res/comm usage accounting for the majority of today’s decline. Colder weather is expected to spread across the entire Northern US next week with the NW and Midwest seeing the coldest conditions relative to normal. As a result, heating demand is expected to surge nearly 10 BCF/day from today’s level over the next week. Colder conditions are likely to remain in place across the North during the 11-15 day period although cold will lessen in intensity.

Prices are trading slightly lower on the day as the market awaits storage data.
Technical Analysis

The March 25 natural gas contract traded down to a 3.161 low on Wednesday partially closing the downside gap created on Monday’s open.
Late day buying rallied the March contract to a 3.360 settle, up .107 (3.3%). Volume was moderate at 170,256 contracts.
10 day moving average resistance at 3.420 is being tested in today’s early trade. If broken, the 40 day moving average at 3.610 will become the next area of support.
10 and 40 day moving average alignment is now bearish suggesting current strength may quickly stall.
The bottom of the gap created on Monday’s open at 3.118 is near term support followed by 2.990-3.000.
2.990-3.000 is weekly low support from last week as well as the 50% retracement of the 2024-2025 uptrend.
If 2.990-3.000 support is broken, the 61.8% retracement at 2.660 which coincides with the 200 day moving average at 2.710 will become the next downside objective.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -46.54






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