Spot month gas prices moved higher Friday as winter weather conditions and expectations for declining supplies into late January lent support. Production freeze offs and record LNG flows also contributed to the rally. The Feb contract traded in a more than 30 cent range, briefly surpassing $4, before settling at $3.989, up 28.8 cents on the day. For the week, the spot month contract gained 63.5 cents.
Near term forecasts trended colder on Friday while also suggesting frigid conditions would extend further into January than previously expected. Below to much below normal conditions were projected for the entire 15 day period with a very brief reprieve Jan 17.
As of this morning, the 6-10 day period features widespread below normal cold with a round of strong below normal temps expected mid period across the Rockies, Plains and Midwest. The much colder than normal pattern will continue into the 11-15 day period with cold in the East expected to gradually moderate throughout the period.
Venture Global received permission to introduce feedgas to 2 more liquefaction blocks of its Plaquemines terminal. Venture Global now has authorization to flow gas to 6 liquefaction blocks, supporting expectations for an ongoing increase at Plaquemines. On Friday, the terminal received about 830 MMcf/day of feedgas. Corpus Christi expects to reach completion of its first liquefaction train by the end of Q1 2025. Total feedgas demand for Friday was estimated at 15.4 BCF/day and increased further over the weekend to 15.6 BCF/day. For today, feedgas demand is estimated at 14.2 BCF/day.
The EIA is expected to reveal 3 back to back hefty storage withdrawals starting with this week’s report covering the week ended Jan 10. Estimates call for a pull as high as 250 BCF for the week ended Jan 10 while a draw near 200 BCF is likely for the week in progress. By the 3rd week of Jan, Platts predicts stocks will fall below 2.595 TCF which would completely wipe out the current surplus while leaving stocks well below the 5 yr avg.
Production freeze offs as of this morning are at 3 BCF/day, down from a peak of 6 BCF/day this past weekend. Freeze offs however could climb back up this week amid renewed cold.
The Feb contract hit an overnight high of $4.369 but has moved back down below$4 as of this morning, trading currently at $3.985.
Technical Analysis
The highlight of last week’s trade in the natural gas market was a bullish breakout above 10 day moving average resistance on Thursday by the February 25 contract renewing the bullish uptrend.
After settling Friday’s session at 3.986, up .632 (18.8%) for the week, the February contract has gapped higher on Sunday to begin the new week of trade.
The February contract opened the session at 4.347, .361 above Friday’s close, topping out at a 4.369 overnight high before selling back off to the lower-4.000 area.
The 4.369 overnight high is near term resistance followed by the November 2014 high at 4.544.
4.000 is near term support followed by the 10 day moving average currently at 3.710.
Trade should remain choppy and volatile.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -61.52
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