

Nat gas prices posted a modest increase Tuesday as daily output declined while gas flows to LNG terminals remained near record highs. Weather forecasts also turned slightly cooler for the Midwest during the coming 6-10 day period. Institutions are also utilizing natural gas to hedge against equity market risks. April NG settled 3.4 cents higher at $4.052.

Platts is expecting little change to storage for the week ended Mar 14 with projections calling for a draw of 1 BCF. This compares bearishly to the 5 yr avg draw of 31 BCF but contradicts last year’s injection of 5 BCF. Last week’s mild weather reduced heating demand, easing the natural gas market balance. Demand fell 11 BCF/day week over week driven by a 9 BCF/decline in res/comm usage. Production however remained near flat.
With heating demand still muted this week, estimates for the week in progress are calling for a build of 34 BCF.
Production levels are experiencing a downturn due to spring maintenance related outages as well as a force majeure on the El Paso Natural Gas pipeline. According to Platts, output yesterday fell 0.8 BCF/day to 105.5 BCF/day. Today’s production estimate is coming in another 0.7 BCF/day lower at 104.8 BCF/day.

LNG feedgas flows are running at an average of 15.7 BCF/day this month, up from February’s record of 15.6 BCF/day.
The market is extending gains this morning as supply disruptions continue, LNG export demand remains strong while bouts of cooler weather are expected this week across the Midwest.
Technical Analysis

The April 25 natural gas contract turned back higher on Tuesday after failing to break under 4.000 support the previous three sessions.
The trend is neutral at this point but bullish 10, 40 and 200 day moving average alignment and a bullish long term trend following index favor the bulls.
A breakout above 10 day moving average resistance at 4.215 will renew the bullish uptrend turning last week’s 4.901 high into longer term resistance.
On the bearish side, bearish divergences (new price high, lower index high) have been forming on the daily RSI and short term trend following indexes.
A breakout under 40 day moving average support at 3.870 will turn the trend back down into typical post-winter seasonal weakness.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 52.67






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