

The market turned back higher yesterday as colder forecasts and strong LNG feedgas flows overshadowed expectations for a bearish storage report. Helping boost res/comm demand, colder weather is expected to track across the central and eastern US towards the middle of next week. The Dec contract settled 7.6 cents higher at $2.983.

Today’s storage report is expected to show a build of 44 BCF for the week ended Nov 8. This compares to last year’s build of 41 BCF and the 5 yr avg build of 29 BCF. If correct, stocks would rise to 3.976 TCF. It is possible this will be the last injection of the season with Platts calling for a draw of 1 BCF for the week in progress.
Production levels have swung by about 2 BCF/day this past week in response to price direction. After coming in below 100 BCF/day since Sunday, we did see a slight recovery yesterday that continues this morning amid a rebound in prices. Including today’s estimate of 100.7 BCF/day, output over the past 7 days has averaged 99.7 BCF/day.
LNG feedgas demand has been strong as buyers stock up ahead of winter. Feedgas demand has come in at 14 BCF/day for the past 3 days and is estimated this morning at 14.3 BCF/day. Higher LNG gas flows could help offset returning output.

Prices are trading lower this morning as the market awaits storage data.
The market is monitoring a tropical system in the Caribbean that will likely be Tropical Storm Sara by tomorrow. The storm is expected to track northwest into the Yucatan late this weekend or early next week.

The December 24 natural gas contract rallied up to 3.020 high on Wednesday topping out 1 tick above the October 3.019 high. Volume was lower than the previous two sessions but still high at 218,400 contracts.
But the December contract was unable to close above 10-month trend line resistance at the lower-3.000 level settling the day at 2.983.
A close above 3.020 will turn the June 3.159 high into the next upside resistance.
If lower-3.000 resistance continues to hold, the primary trend will remain sideways to down.
10 day moving average support is at 2.800 today followed by the 40 day average at 2.647.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 61.65






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