Nat gas closed lower for a 4th straight session as the market’s focus remained on Hurricane Milton and the likelihood of extended power outages. Hurricane Milton was expected to weaken demand in the Southeast while steering clear of LNG facilities in the Gulf. Production was also not expected to be significantly disrupted while platform evacuations were minimal. Nov NG settled 7.3 cents lower at $2.66.
Below normal injections over the past 12 weeks have cut the 5 yr avg surplus down more than 40% since the spring. Analysts are expecting another seasonally light injection for the week ended Oct 4. Reuters is calling for a build of 71 BCF which falls short of last year’s 85 BCF injection and as well as the 5 yr avg injection of 96 BCF. If correct, stocks would rise to 3.618 TCF.
Early estimates for the week ending Oct 11 suggest a build of 68 BCF which would continue to narrow the surplus.
Milton made landfall last night as a Cat 3 hurricane just south of Tampa. More than 3 million customers across Florida have lost power. It is estimated that 1.7 BCF/day of gas fired electric generation was cut by Milton. Demand overall was estimated down 1 BCF/day to 77 BCF/day.
LNG feedgas demand was estimated yesterday at 12.8 BCF/day while gas power burns fell 1.4 BCF/day, driven mostly by slowdowns in TX and the SE.
Forecasts for the Rockies, Plains and Midwest are trending warmer today during the 6-10 day period while cooler trends are seen across the West. Below to much below normal temps are projected across the East at the start of the period before turning above to much above normal later in the period.
Prices continue lower this morning as Milton is expected to keep demand at reduced for at least the next few days.
Wednesday was the 4th straight day of lower closes. The November contract settled down .073 cents at $2.660. The prompt-month futures contract had now shed over .40 cents since late last week, 13% from its high at $3.019.
The gap between $2.690 - $2.720 was completely filled yesterday. In addition, the market closed below the 40-day moving average at $2.680. Resistance at the 62% retracement of the recent November move is also at $2.700 and that range, $2.680 - $2.700, is key to maintaining the developing downtrend. As long as prices don’t close above those levels, the next target is the $2.500 area.
The Short-Term Trend Following Index turned Down and Moving Average Alignment is also Bearish. The RSI has moved back into Neutral range.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 46.60
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