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By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
Spot month prices settled near unchanged Wednesday, halting the recent losing streak. Prior to yesterday, the past 3 days of trade have been in anticipation of mild weather heading into the new year. The extremity of this week’s arctic cold blast however impacted bearish sentiment yesterday. The Jan contract settled up 0.6 cent at $5.332.
Today’s storage report is expected to show stocks fell 93 BCF in the week ended Dec 16. This compares to a draw of 60 BCF last year and 124 BCF over the past 5 years. If correct, stocks would fall to 3.319 TCF. Early estimates for next week’s report indicate a withdrawal of 188 BCF due to much colder temps and stronger demand.
Production levels held strong yesterday at 96.8 BCF/day but with forecasts for below zero temps in the Midwest and freezing temps in the South, well head freeze offs are likely.
Flows are coming in just over 2 BCF/day lower today and could fall further over the next few days.
Arctic chill and blizzardlike conditions are still expected over the next few days. This will be followed by one of the warmest patterns in the past 40 years. HDDs are forecast to drop from a peak of 42.7 on Dec 24 to 19.8 on Dec 31.
Prices are trading a touch higher this morning as the market awaits storage data.
After dropping nearly 20% over the 1st two days of trade this week, the January 23 natural gas contract closed flat on Wednesday settling the day at 5.332, up 6 ticks.
Tuesday’s 5.256 low held as support on Wednesday and remains near term support today.
If 5.256 support is broken, the final 88% retracement of the October-November uptrend at 5.090 will become the next area of support.
If 5.090 support is reached and holds, it may complete the 4th and final point of a bullish descending rectangle pattern.
If 5.090 support does not hold, the 2 ½ year trend line reached in October at 4.750 will become the next area of support currently near 4.900.
Relative Strength Index – 39.47
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