Varying near term weather patterns along with healthy production levels resulted in a lower settlement yesterday. Intraday losses of nearly 7 cents were reduced as the market headed into the close. The Jan contract ended the day down 1.9 cents at $3.163.
Last week’s extreme cold and jump in heating demand across the Midwest and NE has the market expecting the season’s first triple digit withdrawal. For the week ended Dec 6, Platts expects a pull of 186 BCF, Reuters expects a draw of 138 BCF while NGI is projecting a draw of 176 BCF. All projections are substantially higher than the 5 yr avg pull of 71 BCF and last year’s draw of 72 BCF, resulting in a narrowing of the surplus.
Due to flat production and forecasts for colder than normal temps, the EIA expects gas supplies to fall about 590 BCF this month, 34% more than the 5 yr avg withdrawal for December. The agency pegs end of winter gas stocks to total 1.92 TCF.
LNG feedgas demand has been recovering since falling to 12.9 BCF/day on Monday. Platts estimates feedgas demand this morning at 13.9 BCF/day.
The EIA expects LNG exports to rise next year to an avg of 14 BCF/day, 15% higher than this year’s forecast. Plaquemines and Corpus Christi’s stage 3 are both on track to begin exporting LNG by the end of the month.
Output is coming in 0.4 BCF/day higher at 103.9 BCF/day while total demand has surged 11.6 BCF/day from Tuesday. This is because of an 8.1 BCF/day increase in res/comm usage along with a 1.9 BCF/day rise in power burn and a 0.5 BCF/day increase in LNG feedgas demand.
Prices are currently trading higher with the spot month contract up about 18 cents.
A bullish recovery on Tuesday by the January 25 natural gas contract. The January contract traded down to a 3.069 low in Tuesday’s early trade closing the gap created on Monday’s higher open.
With the gap closed, the January contract reversed course back higher into the close erasing much of the early losses to settle the day at 3.163, down .019.
Early buying today has rallied the above 10 day moving average resistance at 3.165 turning Monday’s 3.324 into the next area of resistance.
Longer term resistance is the 3.563 high set two weeks ago followed closely by the November 2023 high at 3.630.
3.000-3.020 remains primary support. If broken, the 40 day moving average at 2.850 will become the next area of support.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 59.39
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