Spot month nat gas prices surged to a high of $4.901 during Sunday night’s trade as the tight supply situation led to spec driven short covering. Prices quickly retreated back into the 4.60 range and fell even further during Monday morning trade but still settled higher on the day. Solid LNG exports and relatively flat production levels provided support. The Apr contract settled yesterday’s session at $4.491, up 9.2 cents.
The lack of response from producers to the higher priced environment has been supportive, especially given expectations for LNG demand growth this year. Production levels this month are averaging 105.6 BCF/day, down from record highs set during late December and early February in the upper 106 BCF/day range.
After hitting 16.1 BCF/day on Sunday, LNG feedgas demand has trended lower, estimated this morning at 15.3 BCF/day.
Weather forecasts have trended much warmer since the end of last week, particularly for the Midwest during the 5 day period and from the South to the East during the 6-10 day period. Temps this week will average warmer than normal across the Eastern US with highs peaking from the mid 60’s to low 70’s later this week. Overall, forecasts shed 9.9 HDD with yesterday’s 15 day outlook from Maxar predicting a total of 229.1 HDDs. This ranks 5th warmest and is also warmer than last year’s total of 259.9 HDDs.
Bearish weather patterns are resulting in lower withdrawal estimates for the weeks ending March 13 and March 20. There is even a possibility for a small, early season injection.
While gains extended overnight into the early morning, prices are currently trading lower on the day.
Technical Analysis
The April 25 natural gas contract spiked up to a new 2+ year high at 4.901 in Monday’s early trade, up .502 (11.4%) from Friday’s settle, but lost most of the gains by the session’s close. Daily settle came in at 4.491, up .092.
Volume was moderate at 221,480 contracts.
Yesterday’s 4.901 high came near the November 2018 weekly high at 4.929 and remains primary resistance. If broken, the July 2022 weekly low at 5.325 will become the next upside objective.
Daily continuation chart 10 day moving average support is at 4.230 today with longer term 40 day moving average support at 3.860. A close under the 40 day average will turn the trend back down.
Bearish divergences on the daily RSI may be warning a trend change is near.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -61.75
This material should be construed as the solicitation of an account, order, and/or services provided by the FCM Division of StoneX Financial Inc. (“SFI”) (NFA ID: 0476094) or StoneX Markets LLC (“SXM”) (NFA ID: 0449652) and represents the opinions and viewpoints of the author. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Additionally, this material should not be construed as research material. The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand the risks prior to trading. Past results are not necessarily indicative of future results.
All references to and discussion of OTC products or swaps are made solely on behalf of SXM. All references to futures and options on futures trading are made solely on behalf of SFI. SXM products are intended to be traded only by individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM.
SFI and SXM are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact designated personnel from SFI or SXM for specific trading advice to meet your trading preferences.
(1) The StoneX Commodity Indicator provides an overall view of market sentiment for a commodity based on the quantification of fundamental, technical and historical market data related to that commodity. The StoneX Commodity Indicator History graphically represents each day’s actual very bearish to very bullish signal. This history contains the sum of all factors, excluding weather forecasts.
(2) The StoneX Value Matrix provides a measure of historical value by analyzing historical price data distributed into 10 deciles. The prices are adjusted for inflation using the Producer Price Index (PPI) published by the U.S. Bureau of Labor Statistics.
Reproduction or use in any format without authorization is forbidden. © Copyright 2024. All rights reserved.
