Nat gas prices settled higher to end last week’s volatile trade with gains driven by geopolitical concerns and a persistent supply deficit. Friday’s rebound reversed a portion of Thursday’s decline which stemmed from a lower than expected withdrawal. Apr futures settled 9.7 cents higher at $4.399. This marked a 56.5 week over week gain.
After falling to a 3 year low of 13.7 BCF/day during Oct-Feb, gas production in Haynesville has rebounded to a near 6 month high this month. The increase is in response to a higher price environment and an expected increase in LNG feedgas demand this year. Output in the Haynesville is averaging 14 BCF/day, its highest level since late last summer.
Total production is estimated this morning at 105.7 BCF/day with the month to date average at 105.1 BCF/day. This is 2.6 BCF/day higher than last year.
Growing LNG feedgas demand from Plaquemines LNG and the expansion of Corpus Christi have boosted total feedgas deliveries to record highs this year. Further growth is expected this summer as Golden Pass adds more export demand later this year. Some estimates suggest feedgas demand could reach 18.7 BCF/day by December.
Platts estimates feedgas demand this morning at 16.1 BCF/day. Month to date, feedgas demand is averaging 15.7 BCF/day, 2.3 BCF/day higher than Mar 2024.
Macroeconomic data on Friday indicated the US economy is cooling. The PMI index for February came in at 50.3, down from 50.9. If this slowdown intensifies, it could reduce gas consumption in the industrial sector.
The spot month hit an overnight high of more than 4.90 but has since fallen back to below 4.50.
Price action is stemming from technicals and longer term fundamentals. Supply concerns ahead of injection season remain supportive while a warm summer could make refilling storage a challenge. The possibility of reduced gas and power imports from Canada are also at the forefront.
Technical Analysis
The April 25 natural gas contract closed higher 4 out of 5 days in last week’s trade settling Friday at 4.399. For the week, the contract was up .565 (14.7%).
The April contract spiked up to a 4.901 overnight high but is currently .300 under this high near 4.600.
The 4.901 overnight high is very close to the next area of resistance which is the November 2018 high at 4.929.
If 4.929 resistance is broke, the July 2022 low at 5.325 will become the next area of resistance.
The 10 day moving average which held as support on Friday’s low is at 4.205 today. Longer term 40 day moving average support is at 3.850. A close under the 40 day average is needed to turn the trend back down.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -64.89
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