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Daily Natural Gas Market Update 1-12-26

By: Heather Wine, Senior Risk Manager - Energy

StoneX Value Matrix

image-20260112092606-1

Source: StoneX Value Matrix (2), Bloomberg

Fundamentals & Weather

Nat gas prices tumbled Friday amid skepticism that upcoming winter weather will deliver enough cold to drive significant demand increases.  Stronger LNG feedgas demand was overshadowed by robust supply levels, while weekend outlooks offered little indication of a shift in market sentiment.  The Feb contract settled 23.8 cents lower at $3.169.

Today’s 6-10 day forecast from the Weather Desk has shifted warmer in the West and colder in the East.  Much above normal temps are expected across the West while below to much below normal temps are featured in the East. Above normal conditions will spread across the entire South during the 11-15 day period while below normal temps are confined to the very Northern US. 

image 124937

Source: Bloomberg, CME

Natural gas demand increased over the weekend, reaching 134.6 BCF/d, an increase of 17.3 BCF/d from Friday’s levels. Most of this rise stemmed from heating demand, which climbed 12.7 BCF/d compared to Friday. LNG feedgas demand also strengthened over the weekend, peaking at 19.3 BCF/d.  Total demand has eased this morning to 130.6 BCF/d, down 4 BCF/d as heating needs declined by 3.4 BCF/d.  

image 124939

Source: NOAA

Production remains robust at 107.7 BCF/d, with the month to date average at 107.5 BCF/d, 4.1 BCF/d higher than last year. Strong output is helping meet winter demand and has contributed to above normal storage levels.   Producers continue bracing for rising demand as a significant pipeline buildout advances along the Gulf Coast. 

image 124938Source: NOAA

Lower demand last week is expected to have capped withdrawals with estimates coming in below historical levels.  Stocks are expected to catch back up to year ago levels in the coming weeks.  End of season storage projections are now above 2 BCF.  

The spot month is currently trading 10 cents higher on expectations for colder weather across the East for mid to late January. 

image-20260112092656-2

Source: Bloomberg, CME

The February 26 natural gas contract has closed lower 7 out of the past 8 trading days including a heavy sell off on Friday which dropped the contract to a new 12-week low.

Over the past 5 weeks, the February contract has lost 1.700 (34.7%) including a .449 loss (12.4%) last week settling Friday at 3.169.

Volume on Friday was massive at 322,218 contracts, the highest volume day since December 5th when the market set a high at 5.496.  Friday’s volume spike could indicate a low is near.


 

3.190-3.200 support was broken on Friday turning the lower-3.000 level into the next area of support which will close a small gap on the daily continuation chart at 3.025.

3.190-3.200 support broken on Friday is now near-term resistance followed by 3.300-3.320.

Moving Average Alignment - Neutral-Bearish

Long Term Trend Following Index – Bearish

Short Term Trend Follow Following Index - Bearish

Relative Strength Index - 36.90

image 124941

Source: Bloomberg, CME

image 124943

Source: Bloomberg, CME

image 124942

Source: Bloomberg, CME

image 124491

Source: Bloomberg, CME, StoneX Value Matrix (2)

image 124490

Source: Bloomberg, CME, StoneX Value Matrix (2)

Forward Curve Pricing

image 124940

Source: Bloomberg, CME

Disclaimer
(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.
 

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