

Natural gas prices were back higher yesterday, climbing 3% on near term cold and a downturn in production. The market was also bracing for updates on another round of tariffs and levies on imports from Canada and Mexico. The May contract settled 10.4 cents higher at $4.055.

Today’s storage report is expected to show stocks rose 25 BCF in the week ended Mar 28. This compares to last year’s draw of 37 BCF and the 5 yr vg draw 13 BCF. If correct, stocks would rise to 1.769 TCF. Early estimates for next week’s report covering the week in progress suggest a build near 47 BCF, which compares to last year’s 16 BCF injection and the 5 yr avg injection of 17 BCF.
Production has seen a downturn this week to below 106 BCF/day. Output Tuesday fell to 105.1 BCF/day and has climbed back up to 105.5 BCF/day as of this morning. Over the next 2 weeks, output is expected to average 105.4 BCF/day. Production is still trending 3 BCF/day higher than last year with the month to date avg at 105.2 BCF/day.
In the long term, a softer global economy, trade barriers and downside risks for oil could limit the incentive to expand associated nat gas production.

Trump imposed a blanket 10% tariff on all imports with higher rates on other countries. While LNG, crude oil and fuel oil are exempt from tariffs, the tariffs have sparked a broader economic concern that could result in lower prices, particularly if economic growth slows. Industrial demand for nat gas could weaken while any retaliatory measures could impact US LNG exports.
Weather models trended colder overnight as weather systems track across the Midwest and East, leaving overnight lows between 10 and 30 degrees.
Technical Analysis

The May 25 natural gas contract is currently higher in today’s early trade after rallying back over 10 and 40 day moving average support on Wednesday.
The May contract settled under these two averages on Tuesday, but similar to last week’s trade, the breakout failed to hold.
After settling Wednesday’s session at 4.055, up .104, the May contract is up and additional .078 today at 4.133 with Monday’s 4.253 high being primary resistance.
A breakout above 4.253 will turn previous highs at 4.370 and 4.480 into the next areas of resistance. Longer term resistance is the 4.901 high set three weeks ago.
40 day moving average support is at 4.005 today followed by the 10 day average at 3.990 (10 and 40 day moving average alignment is currently bearish).
A breakout under 3.990 will turn last week’s 3.689 low into the next area of support.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 52.59






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