Following an 8% decline on Wednesday, Friday’s trade ended with a 5% gain of 16 cents as extreme cold arrived in the central and eastern US. Volatility in the nat gas market continues to be driven by shifting near term weather forecasts with markets trying to determine how the long the current cold snap across the central and east will last. Prices are starting the week lower as weather forecasts now indicate less cold for mid to late December.
Total demand has increased substantially from Friday’s 131.4 BCF/day to 141.3 BCF/day this morning. This coincided with a boost in res/comm demand to 47.1 BCF/day as of this morning. Below to much below normal readings will continue to dominate the Eastern US this week, keeping demand levels high. Storage withdrawals are likely to ramp up given the significant increase in heating demand.
LNG feedgas demand has pushed higher since late last week and remains strong this morning at 14.6 BCF/day.
Storage levels declined 2 BCF during the week ended Nov 22 which was bearish against the 5 yr avg draw of 30 BCF but bullish against last year’s build of 5 BCF. The pull confirmed that injection season concluded during the week ended Nov 8.
Gas stocks are heading into winter with the highest level since 2016 at 3.972 TCF, 6% higher than the 5 yr avg. The EIA estimates storage withdrawals this season will total 1.957 TCF with inventories projected to remain about 6% above the 5 yr avg at the end of Mar 2025.
Prices are lower this morning as weather forecasts for the 6-10 day period appear colder versus previous outlooks in the West and warmer in the East. Early below to much below normal temps along the East Coast will give way to a round of above normal readings in the Central US and along the East Coast by early next week. Temps will return to normal to below normal at the end of the period across the Eastern half of the US.
The rig count is up 1 rig week over week at 100 rigs. Output is estimated this morning at 102.8 BCF/day, down from Friday’s 103.4 BCF/day.
The expired December 24 natural gas contract rallied up to a new 11-month high at 3.563 in last Monday’s trade.
With the January 25 taking over as the spot contract on Tuesday, the contract held in a sideways range into Friday’s close settling at 3.363. For the week, the January contract was up .076 or 2.3%.
The January contract gapped lower to begin the new week of trade opening at 3.250, down .113 from Friday’s close, and is currently trading under 10 day moving average support at 3.220.
A close under the 10 day average will turn former 3.000-3.020 resistance into the next area of support. Longer term 40 day moving average support is at 2.760.
Last week’s 3.563 high remains primary resistance followed by 3.630 which was the November 2023 high and the winter 2023-2024 spot contract high.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 56.15
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.
