

April futures were surpassingly strong on Monday, surging more than 30 cents to a mid-session high of $4.15. Fund buying along with tighter fundamentals, including more supportive weather outlooks as we near the end of heating season, contributed to yesterday’s rally. Geopolitical tensions also appear to be affecting global gas markets. The April contract settled 28.8 cents higher at $4.122

A portion of yesterday’s gains were fueled by both overnight and midday outlooks adding in numerous HDDs, suggesting winter isn’t over quite yet. The latest NWS forecast shows colder air building across the West this weekend with temps averaging below normal as far east as the Rockies. Readings are expected to run 4 to 5 degrees below normal through next week. Mild weather across the Midwest and East Coast during the same timeframe should more than offset higher demand levels across the West. There is concern that the colder air out West could make its way eastward.
Consumption over the first 3 days of March registered anywhere from 12 to 16 BCF/day higher than last few days of February. Total demand is back down to 110.8 BCF/day today, 10.2 BCF/day lower than yesterday. A drop in res/comm usage accounts for 7.5 BCF/day of this decline while power burn is coming in 1.3 BCF lower on the day. Demand is expected to turn higher again over the next week which does not bode well for storage withdrawals.

Prices continue to surge this morning, rising another 7% on record LNG feedgas demand and inventories running more than 600 BCF below last year.
Technical Analysis

A bullish reversal in the natural gas market on Monday after the spot April 25 contract held above key support in early trade.
The support which held was the daily continuation chart 40 day moving average at 3.740 with the April contract bottoming at a 3.742 morning low.
With support holding, buyers came in rallying the April contract back over 10 day moving average resistance to close the day at 4.122, up .288 (7.5%).
Volume was strong at 269,838 contracts.
With 10 day moving average resistance broken on Monday, the 4.476 high set two week ago becomes the next area of resistance.
If 4.476 resistance is broken, the November 2014 high at 4.544 will become the next area of resistance with longer term resistance at the November 2018 high at 4.929.
The 10 day moving average broken as resistance on Monday is now the first area of support today at 4.090.
Longer term 40 day moving average support is at 3.765 today. A close under the 40 day average will turn the trend back down.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -60.14






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