

Natural gas prices continue to unravel following a rally earlier this month. Prices yesterday were unfazed by the storage report, rising briefly in the morning only to sell off later in the day as the injection aligned with expectations. This, along with forecasts suggesting little weather demand over the next 2 weeks, weighed on the market. Nov NG settled at $2.347. Month to date, the Nov contract is down nearly 20%. Wednesday’s trade down 13.1 cents at $2.367.

Storage levels rose by 76 BCF in the week ended Oct 11 to 3.705 TCF. The injection was in line with estimates and compared to last year’s build of 93 BCF and the 5 yr avg build of 89 BCF. Stocks are now 163 BCF, or about 5%, above the 5 yr avg and 107 BCF, or 3%, above last year.
Estimates for the next 3 injections could take storage levels up to 3.9 TCF, with a possibility that injections could continue into November. Stronger heating demand along with softer output is resulting in expectations for a 64 BCF injection for the week ending Oct 18. This would trim the 5 yr avg surplus by another 12 BCF.
This week’s bout of colder weather has caused a spike in heating demand. Res/comm usage over the past 2 days has come in north of 20 BCF/day. with temps turning warmer, heating demand is estimated today at 18.1 BCF/day, down 2.1 BCF/day. This decline, along with a 1 BCF/day drop in power burn and a 0.5 BCF/day decline in LNG feedgas, has helped pushed total demand down 3.2 BCF/day to 98.8 BCF/day. Demand is expected to continue declining over the next week as much warmer temps move into the central and eastern US.

The spot month contact is trading down more than 7 cents this morning as the weather pattern looks to be turning warmer heading into the final third of October. The 15 day forecast from Maxar features a record low 97 HDDs.
There is currently no threatening tropical activity in the tropics.

The November 24 natural gas contract is on course for a 3rd consecutive lower weekly close after closing down 3 out of 4 trading days this week.
The November contract lost .020 on Thursday to settle at 2.347 after bottoming at a 2.338 daily low.
The near term trend remains down with the 61.8% retracement of the August-October uptrend at 2.310 being the next area of support.
60 minute chart trend following indexes are showing bullish divergences possibly suggesting a low may be forming.
2.440-2.450 is near term resistance followed by the 10 day moving average at 2.550.
If 2.310 support is broken, the 200 day moving average on the daily continuation chart at 2.240 will become the next area of support.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 39.14






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