

Gas prices traded much of Wednesday’s session rangebound as expectations for a lower than normal storage withdrawal and solid heating demand over the next 2 weeks counteracted one another. Production also remains strong in the face of higher LNG feedgas demand. The spot month contract ultimately settled 4.6 cents higher at $3.565.

Production is attempting to keep up with recent demand increases, averaging 105.1 BCF/day so far this month. Production could however briefly decline given the frigid conditions this week and next. Freeze offs could knock out about 3 to 4 BCF/day of output.
LNG feedgas flows have set records this week with further upside possible in the near term. LNG feedgas demand is estimated this morning at 15.8 BCF/day, up from yesterday's 15.5 BCF/day.
Prices are trading higher this morning as forecasts trended even colder overnight for the 6-10 day period. Temps are expected to average strongly below normal from the Midcon to the South with lows falling below zero. Temps across the East will average much below normal for most of the period while the West averages near normal. Below normal conditions will linger across the East into the 11-15 day period with the intensity of the cold fading. Above normal temps will move back into the western half of the US.

This morning ‘s storage report is expected to show gas stocks down 95 BCF for the week ended Feb 7. This is bullish when compared to last year’s draw of 60 BCF but compares bearishly to the 5 yr avg draw of 144 BCF. Early withdrawal estimates for the following 2 reports suggest we could see stocks fall more than 400 BCF combined.
The spot month is currently trading 15 cents higher.
Technical Analysis

Another higher close for the March 25 natural gas contract on Wednesday, a 6th higher close over the past 8 sessions.
After settling Wednesday’s session at 3.565, up .046, the March contract is approaching two key areas of resistance.
The first resistance is the 40 day moving average on the daily continuation chart at 3.635 followed closely by the 50% retracement resistance of the January downtrend at 3.680.
A close above 3.680 will turn the 61.8% retracement at 3.840 into the next area of resistance.
The daily chart short term trend following index has turned into a bullish position and trend following indicators on the 60-minute chart are well under levels considered “overbought” suggesting this rally may have room to run on the upside.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -54.18






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