Spot month gas prices settled near flat on Friday but ended the week with a more than 8% loss. Weather outlooks pointed to lower demand over the weekend into early this week, followed by stronger heating needs as cold conditions return to the Midwest and NE. Increased LNG feedgas demand also helped limit losses. Jan futures settled .003 lower at $3.076.
The latest round of forecasts suggest a wide range of temperatures due to varying weather patterns. A warm up over the weekend across the Great Lakes and NE will extend into the beginning of this week followed by a short lived cold blast later this week. A cold shot will track across the Midwest and NE, leaving highs in the 20-30 degree range while lows will could reach 0 degrees in some regions. More mild conditions will then return for mid December followed by more cold later in the month.
LNG export demand held strong last week and is expected to remain elevated over the next few weeks. Feedgas demand is coming in this morning at 14.3 BCF/day after reaching 14.5 BCF/day on Sunday. Plaquemines has received approval to introduce feedgas to additional units with expectations the facility is close to exporting its first cargo. Corpus Christi’s expansion is also expected to begin production by the end of the year.
Heating demand has moderated to 32.8 BCF/day from last week’s high of 47.9 BCF/day. Given the projected shift in temperatures, res/comm usage is expected to average 40.2 BCF/day over the next week before trending back down to 37.3 BCF/day over the following week.
The market is trading higher this morning on fluctuating weather conditions and strong LNG feedgas demand. We are also seeing a bump in output levels with production estimated at 103.8 BCF/day.
The January 25 natural gas contract was heavily sold in last week’s trade losing .287 (8.5%) over 5 days of trade to close the week at 3.076.
Prices have gapped higher by nearly .200 on Monday’s open after consolidating above lower-3.000 support during Wednesday-Friday’s sessions.
The January contract gapped above 10 day moving average resistance at 3.205 which now becomes support followed by the bottom of the gap at 3.100.
The lower-3.000 area which held last week remains primary support. If broken, the 40 day moving average at 2.815 will become the next area of support.
The 3.563 high set two weeks ago remains primary resistance followed closely by the November 2023 high at 3.630. There is a good chance the these two resistance areas will continue to hold keeping prices in a sideways to lower range.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 58.63
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