

Jan futures pulled back during yesterday’s trade amid uncertainty over the intensity of the upcoming cold. American weather models added 8 HDDs for the first week of Jan while European weather models trended warmer, taking out 5 HDDs for the same timeframe. Light volume added to yesterday’s volatility. Today’s expiring Jan contract fell 23.1 cents to settle at $3.715.

LNG feedgas flows are on track to reach record highs. Plaquemines exported its first cargo yesterday which is headed to Germany, making this the 8th major LNG export terminal in the US. The expansion at Corpus Christi is nearing the start of production after the FERC granted permission to introduce feedgas to the first liquefaction train of the project earlier this week. Feedgas demand is estimated this morning at 14.8 BCF/day, on par with Thursday.
Following 2 back to back hefty storage drawdowns, a more seasonable withdrawal is expected in today’s storage report. The EIA is expected to report a draw of 98 BCF for the week ended Dec 20. This would be higher than last year’s draw of 87 BCF but lower than the 5 yr avg decline of 127 BCF. If correct, stocks would fall to 3.524 TCF.
Early estimates for the week ending Dec 27 suggest a draw of 122 BCF which compares to the 5 yr avg draw of 104 BCF.

Prices are trading higher this morning as more early January cold was added to overnight forecasts. EU weather models added 17 more HDDs for the first 10 days of Jan, leaving American and EU weather models more closely aligned. Above normal temps are currently dominating the entire US, helping reduce heating demand.

Today’s expiring January 25 natural gas contract suffered a heavy sell off on Thursday after testing 4.000 resistance in early trade.
The January contract rallied up to a 4.010 morning high on Thursday which was followed by steady selling into the close losing .231 (5.8%) to settle at 3.715.
Holiday-volume was very low for a 3rd day registering just 67,209 contracts.
A potentially bearish outside range day formed on Thursday but will need lower trade today for confirmation. The January contract is currently up .090 trading near 3.800.
A breakout above Thursday’s 4.010 high will turn the November 2014 high at 4.544 into the next area of resistance.
10 day moving average support is at 3.560 today which coincides with former double top resistance and will be an important support area if reached.
If 10 day moving average support is broken, the 40 day moving average at 3.165 will become the next longer term support.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 63.18






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