Nat gas prices ended Tuesday’s session with a loss of 4% as lower production levels and a threat to energy infrastructure in the Gulf offset ongoing mild weather conditions. The Dec contract settled 11.1 cents lower at $2.67.
Tomorrow’s storage report is expected to show a 3rd straight higher than normal injection with estimates suggesting a build of 62 BCF. While this would be 16 BCF lower than the previous week’s addition, it would fall short of both last year’s 19 BCF build and the 5 yr avg build of 32 BCF. A build this size would widen the 5 yr avg surplus to 212 BCF, or nearly 6%.
While production levels typically ramp up ahead of winter, producers this year are in a wait and see mode, responding to price fluctuations instead. Month to date, output is averaging 4.3 BCF/day lower than last year at $100.7 BCF/day. Output levels fell yesterday to 99.8 BCF/day and are estimated this morning at 99.4 BCF/day. This is largely due to maintenance related flow restrictions in the East while pipeline work is also restricting flows out of the Permian.
Rafael has reached hurricane status and is likely to make landfall in western Cuba later today. Rafael will move into the GOM overnight with the landfall most likely along the central Louisiana coast sometime this weekend. This however could change given the wide scope of possible landfall locations. Nat gas production losses from the storm could range between 4.5 and 6.4 BCF while 4 mb of oil output could be disrupted.
The outcome of the election is not likely to have much of a near term impact on gas prices. Longer term, impacts will be mostly demand side related.
The December 24 natural gas contract turned back lower on Tuesday nearly erasing all of Monday’s gains as it closed the day at 2.670.
10 and 40 day moving average support which held on Monday remains support today at 2.610 (10 day average) followed by 2.570 (40 day average).
A close under 2.570 will turn the bottom of the gap created during expiration of the November 24 contract at 2.390 into the next area of support. Longer term support is the 200 day moving average at 2.220.
2.818 is weekly high resistance followed by 2.970-3.000 which is daily continuation chart trend line resistance drawn above three 2024 highs. As long as the spot contract holds under 3.000, the trend will remains sideways to down.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 55.52
This material should be construed as the solicitation of an account, order, and/or services provided by the FCM Division of StoneX Financial Inc. (“SFI”) (NFA ID: 0476094) or StoneX Markets LLC (“SXM”) (NFA ID: 0449652) and represents the opinions and viewpoints of the author. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Additionally, this material should not be construed as research material. The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand the risks prior to trading. Past results are not necessarily indicative of future results.
All references to and discussion of OTC products or swaps are made solely on behalf of SXM. All references to futures and options on futures trading are made solely on behalf of SFI. SXM products are intended to be traded only by individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM.
SFI and SXM are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact designated personnel from SFI or SXM for specific trading advice to meet your trading preferences.
(1) The StoneX Market Indicator provides an overall view of market sentiment for a commodity based on the quantification of fundamental, technical and historical market data related to that commodity. The StoneX Market Indicator History graphically represents each day’s actual very bearish to very bullish signal. This history contains the sum of all factors, excluding weather forecasts.
(2) The StoneX Value Matrix provides a measure of historical value by analyzing historical price data distributed into 10 deciles. The prices are adjusted for inflation using the Producer Price Index (PPI) published by the U.S. Bureau of Labor Statistics.
Reproduction or use in any format without authorization is forbidden. © Copyright 2024. All rights reserved.
