

Jan futures surged higher Thursday following another triple digit withdrawal. Prices were on the rise prior to storage data and continued to climb sharply through the afternoon forecasts hinted at another cold blast for early January. Tacking onto the previous 2 day rally of 16 cents, the Jan contract rose another 21 cents yesterday, settling at $3.584. The spot month contract is on track for a 12% gain this week, adding onto last week’s 7% rise.

In line with expectations, storage levels fell 125 BCF in the week ended Dec 13, leaving total gas stocks at 3.622 TCF. The draw exceeded both last year and the 5 yr avg comparisons, helping narrow the 5 yr avg surplus to 132 BCF and the year over year surplus to just 20 BCF. The Midwest and East regions saw the largest pulls of 48 BCF and 34 BCF, respectively.
The next 2 storage reports are currently projected to show draws of 104 BCF and 151 BCF which would leave storage levels at 3.367 TCF as of Dec 20.
LNG feedgas demand hit 14.6 BCF/day yesterday and is pegged this morning at 15 BCF/day. Flows at Sabine Pass hit a 7 month high of 5.1 BCF/day while demand at Plaquemines has been steady at 0.4 BCF/day. Platts projects feedgas demand will remain strong over the next 2 weeks, near 14.9 BCF/day.

A near term cold snap is expected this weekend with the chillier readings already advancing towards the Mountain and Midwest regions. Temps are are expected to significantly warm up by Wednesday and remain warm through the end of the year. Weather models are showing a cold pattern setting up for the first week of January although the intensity and scope of the cold remain uncertain.
Prices continue to climb this morning on stronger feedgas demand while forecasts show next week’s warm pattern gradually declining. We are also seeing short covering ahead of a potential cold blast in January.

The natural gas market continues to show impressive strength with the January 25 contract breaking out above 3.559-3.563 resistance on Thursday while negating the possible double top reversal.
After closing Thursday’s session at 3.584, up .210 (6.2%), the January contract has broken out above the November 2023 high at 3.630 in today’s early trade.
The February 2018 winter high at 3.661 is the next area of resistance followed by the December 2016 at 3.994.
60 minute chart RSI reached 80 yesterday, well above the 70 level considered “overbought”. RSI is also showing a bearish divergence warning of near term pull back.
Former 3.559-3.563 resistance is now near term support followed by the 10 day moving average at 3.360.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 66.07






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