A loosening in the natural gas supply/demand balance pushed the spot month contract below the $4 level on Friday given mild weather forecasts into early April. Prices however strengthened back up in the afternoon as midday forecasts trended cooler for the coming 15 days. Weather will remain a key influence for gas prices over the next few weeks as it will heavily impact demand and storage levels as we close out heating season. April NG settled Friday’s trade down 0.7 cents at $4.104.
TTF prices are feeling pressure from mild weather expectations for later this week and a possible ceasefire to the conflict in Ukraine. The US and Russian presidents plan to speak on Tuesday with the markets cautiously optimistic. The EU balance remains tight with gas stocks 35% full versus last year’s 59.7%. Warmer conditions on the horizon should help loosen the balance.
Midday forecasts on Friday trended several HDDs colder as a strong weather system and resulting cold front is expected to move into the Northern US Mar 20-22.
This morning’s forecast has trended cooler with below normal temps now favored across the Midwest for the middle to end of the 6-10 day period with the East moderating to near normal later in the period. Temps across TX will average above to much above normal while the West will see widespread warmth late in the period. Above normal conditions will persist in the West for the 11-15 day period while below normal temps encompass the Great Lakes to the East Coast.
Prices are currently trading lower as warmer temps are helping offsetting tariff uncertainty.
Production levels are estimated at 16.3 BCF/day this morning while estimates for this week's storage report suggest a draw of 19 BCF. This compares to the 5 yr avg draw of 31 BCF.
Technical Analysis
The April 25 natural gas contract spiked up to a new 2+ year high at 4.901 in last Monday’s trade but sold off into Friday’s close ending the week at 4.104.
For the week, the April contract was down .295 or 6.7%.
A bearish dark cloud cover Japanese candlestick formed on the weekly bar last week but prices are currently up in today’s early trade.
Last week’s 3.962 low extending down to the 40 day moving average at 3.860 remains primary support. A close under the 40 day average will turn the trend back down.
The 10 day moving average broken as support last week is now near term resistance at 4.280. Longer term resistance is last week’s 4.901 high.
Funds were net long 297,383 contracts as of the 3/11 close. Fund liquidation could quickly become a bearish factor if 40 day moving average support is broken.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -51.22
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