

Losses continued into Friday’s trade with pressure stemming from continued mild weather outlooks for the balance of October into early November. While cooler conditions last week prompted stronger res/comm usage, the increase was short lived as much warmer temps have since emerged across much of the US, pushing heating demand back below the 5 yr avg. Nov futures ended Friday’s trade 8.9 cents lower at $2.258. The spot month has settled lower 3 weeks in row, with losses totaling more than 70 cents.

Production levels increased on Friday to 101.6 BCF/day. Including today’s estimate of 101.4 BCF/day, output over the last week is averaging 100.9 BCF/day. Month to date, output is at 101.3 BCF/day, 1.8 BCF/day lower than last year.
Natural gas drilling rigs fell 2 last week to a total of 99 rigs. While E&P companies typically ramp up output ahead of winter, the latest weather outlooks are dampening strong demand expectations. The CEO of the largest global E&P company does not anticipate US activity rebounding near term, with any potential increases in gas rigs quickly offset by further declines in oil rigs amid increased operating efficiency.
Forecasts for the first half of November currently show above normal conditions across the entire eastern 1/3 of the US and across the South Central US. Below normal conditions are expected in the NW corner of the US. Forecasts for the 6-10 day period trended cooler over the weekend, causing a gain of 9.5 HDDs since Friday. Lows are expected to reach into the 30s in the Midwest and into the 20’s in the Interior East. A total of 115.7 HDDs are projected over the coming 15 day period which would be a record low.

The NOAA says a slowly developing La Nina will influence overall weather patterns this winter. Historically, December could run colder in parts of the Midwest and NE along with the NW and Northern Plains.
LNG feedgas nominations rose to a high of 14.4 BCF/day last Thursday. Volumes have since trended lower, estimated this morning at 13.1 BCF/day. Feedgas demand is expected to remain steady, averaging about 13.2 BCF/day over the next 2 weeks.
Prices are pushing higher this morning on talk producers will likely maintain production curtailments as long as adverse weather conditions persist next month.

The November 24 natural gas contract has rebounded in today’s early trade after closing lower for a 3rd consecutive week on Friday.
The November contract lost .374 (14.2%) in last week’s trade and is down .761 (25.2%) over the past three weeks closing Friday at 2.258.
The November contract has is currently trading near 2.300 in today’s early trade after holding above daily continuation chart 200 day moving average support at 2.240 today on early weakness.
If the 200 day moving average fails to hold as support, the 78% retracement of the August-October uptrend at 2.120 will become the next area of support.
40 day moving average resistance is at 2.440 today followed by the 10 day average at 2.495.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 37.86






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