After banging up against the $3 level for several sessions, the Dec contract finally broke through during yesterday’s trade, hitting an intraday high just under $3.06. Strength stemmed from stronger demand expectations as colder weather arrives later this week along with robust LNG flows. The Dec contract pulled off its daily high prior to settlement, ending the session up 2.5 cents at $2.998.
The EIA updated its estimates for the previous 8 weeks using a weighted average of old and new samples. As a result, total gas in storage as of Nov 8 was revised lower by 2 BCF to 3.972 TCF. This took into account a change in the previous week’s injection from 42 BCF down to 41 BCF.
Most storage models are calling for one last injection of the season. For the week ended Nov 15, Platts predict a build of 5 BCF while Reuters is calling for a build of 20 BCF . Any size build would be bearish when compared to the 5 yr avg withdrawal of 16 BCF. A build of 12 BCF was reported for the same week last year.
If the colder pattern arrives as expected, we could see larger than normal withdrawals quickly develop, helping the surplus diminish.
Total demand this week has been steadily rising with the help of stronger heating needs. As of this morning, consumption is projected at 113.2 BCF/day, up 5.1 BCF/day from Tuesday and 9 BCF/day higher than Monday. This trend is expected to continue with total demand seen averaging more than 124 BCF/day during 8-14 day period. The increase will mostly stem from the res/comm sector while LNG feedgas demand is expected to maintain a 14.3 BCF/day avg over the next 2 weeks.
This morning’s forecast trends colder across the East and warmer in the West. Cold air from Canada will expand into the Central US, leaving temps at below to much below normal levels across the Northern Plains. Temps across the East will moderate to near normal levels. Late in the period, another round of cold will push into the Western and Central US, leaving readings below normal across nearly the entire country.
Prices are back up this morning, with the spot month trading about 10 cents higher on the day.
The December 24 natural gas contract has broken out above 10-month trend line resistance in today’s early trade at the lower-3.000 area.
This breakout coincides with 40 day moving average resistance on the 2025 strip which is another bullish indicator.
The October 3.159 high is the next area of resistance for the December contract with longer term resistance at the 3.392 January 2024 high.
3.000-3.020 is now near term support followed by the 10 day moving average currently at 2.885.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -64.30
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