

The first cold snap of the season drove nat gas prices higher Tuesday though gains were tempered by expectations for rising production and a return to more mild weather this weekend through the end of the month. Nov futures settled about unchanged at $2.498, up .004.

Production levels dropped yesterday as 2 days of scheduled maintenance began on the El Paso Natural Gas Pipeline. Output in the Permian fell about 0.7 BCF/day with total output pegged at 100.1 BCF/day. This was down 1.7 BCF/day from Monday. Today’s output is estimated at 99.8 BCF/day, down another 0.3 BCF/day. Production is expected to tick back up as we progress through the week.
Res/comm usage has seen consistent daily growth this week as much colder conditions have moved into the Central and Eastern US. Heating demand has steadily increased since Saturday’s level of 10.7 BCF/day with usage climbing to 21.9 BCF/day as of today. This is up 4.1 BCF/day. LNG feedgas demand also remains strong, coming in this morning at 13.5 BCF/day. Power burn however has weakened by 2.4 BCF/day to 31.1 BCF/day. Total demand for today is estimated at 103.1 BCF/day, up 1.9 BCF/day from Tuesday.

Tomorrow’s storage report covering the week ended Oct 11 is expected to show a 14th straight below normal build. Reuters is calling for an injection of 68 BCF with compares to last year’s build of 93 BCF and the 5 yr avg build of 89 BCF.
Prices are declining this morning as the weather pattern for the coming 6-10 day period shows above normal conditions across the entire country. Above to much above normal temps will be prevalent across the Midwest and East with highs in the mid to low 70's. The spot month is currently trading down more than 7 cents.

The November 24 natural gas contract closed 4 ticks higher on Tuesday settling at 2.498 after holding above two key support levels.
The two support levels which held were 50% retracement of the August-October uptrend at 2.445 followed closely by the 40 day moving average at 2.425.
Support is being tested again today with early weakness. A close under 2.425 will turn the 61.8% retracement at 2.310 into the next downside objective.
2.590-2.600 is near term resistance followed by the 10 day moving average at 2.670. Longer term resistance is at 3.000.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 42.48






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