Wednesday’s late day rally extended into Thursday as weather forecasts turned cooler, adding in more heating degree days while output held steady. Gains stalled after the EIA reported a larger than expected injection, however the rally gained steam shortly thereafter. The spot month contract settled with an 18 cent gain at $2.522 while the Dec contract rose .152 to settle at $3.018.
Storage levels rose 80 BCF in the week ended Oct 18, leaving total stocks at 3.785 TCF. The build was 20 BCF higher than expected and 4 BCF above the 5 yr avg. The 5 yr avg surplus rose to 167 BCF, marking the first increase in 15 weeks while the year over year surplus fell to 106 BCF.
Stronger res/comm and LNG feedgas demand had suggested a tighter market balance last week. Lingering mild weather in the South Central region however led to a massive 39 BCF build that included a 21 BCF injection into salt facilities.
Early estimates suggest a larger than normal 84 BCF build for the week in progress, which compares to the 5 yr avg build of 67 BCF and last year’s build of 77 BCF.
LNG feedgas demand did see a decline this week but has started to inch higher, coming in this morning at 13 BCF/day. LNG feedgas demand remains hopeful with Plaquemines LNG terminal expected to reach 1.7 BCF/day of capacity utilization in early 2025. Corpus Christi's stage 3 expansion appears to be running ahead of schedule with gas possibly starting to flow through by the end of this year. The expansion should reach full utilization of 1.32 BCF/day next year.
Revised weather outlooks proved supportive as HDD projections continued to rise due to a brief cold spell over the Great Lakes and NE this weekend. Lows will likely drop into the 40s. Temps next week will warm back up with the warmest lows forecast to be warmer than this weekend’s highs. The upcoming 6-10 and 8-14 day patterns still remains one of the warmest on record with 147 HDDs forecast over the next 15 days.
The November 24 natural gas contract closed up for a 2nd day on Thursday rallying over 10 and 40 day moving average resistance to close the day at 2.522. For the day, the November contract was up .180 or 7.7%.
Volume, however, was unimpressive at 139,719 which likely indicates much of yesterday’s rally was short-covering.
The rally stalled at 2.580-2.600 resistance on Thursday with no follow through buying so far in today’s early trade.
The 40 day moving average broken as resistance on Thursday is now near term support at 2.480 followed by the 10 day average at 2.395. Longer term support is the 200 day moving average at 2.225 which held as support earlier this week.
2.580-2.600 is near term resistance with longer term resistance at 3.000 where the market last topped in early-October.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 49.96
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