

Spot month gas prices extended their rally to a 4th straight day on Friday, climbing another 5% amid forecasts for colder conditions next month. Futures prices followed sizeable gains in eastern US hub prices as colder weather loomed for the weekend. Elevated feedgas demand also supported the upward price momentum. Jan futures settled 16.4 cents higher at $3.748. For the week, the contract was up about 14% after gaining 7% the previous week.

Storage levels so far this month have fallen by 315 BCF. This week’s report is expected to show a weekly decline of about 100 BCF, which would be higher than last year but lower than the 5 yr avg. Weather driven demand helped lift consumption levels last week as did feedgas flows, which rose to 15 BCF/day on Friday. Estimates for the week ending Dec 27 are calling for a larger than normal pull of 165 BCF.
Weather outlooks this morning show a strong probability for the entire US to experience above normal temps from the middle of this week into the start of the new year. Longer range outlooks however are showing a cold pattern emerging Jan 2-6 with the colder readings spreading from the Midwest through the entire eastern US. Friday's updated 3 to 4 week outlook from the NOAA suggests this cold pattern could persist throughout January.

Spot month gas prices are easing this morning following a spike higher overnight. The volatile price direction is being mostly driven by weather.

The January 25 natural gas contract overcame selling last Monday to close the week strong gaining .468 (14.3%) for the week settling Friday at 3.748, a 23-month high.
Early buying today has rallied the January contract up to a 3.944 overnight high, just under the next area of resistance at 3.994, a high set in December 2016.
If 3.994 resistance is broken, the November 2014 high at 4.544 will become the next upside resistance.
Former double top resistance broken last week at 3.559-3.563 is now near term support followed by the 10 day moving average at 3.430. Longer term 40 day moving average support is currently at 3.070.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 67.85






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