

Nat gas prices traded higher Wednesday with support from robust LNG feedgas demand, softening production and an uptick in heating demand that is expected to last through the weekend. This week’s output has been impacted by 2 force majeure events declared by El Paso Natural Gas Co, leading to a decline on the New Mexico portion of the Permian Basin. The April contract settled 19.5 cents higher at $4.247.

Today’s storage report is expected to show gas stocks fell 3 BCF in the week ended Mar 14 which would leave total gas in storage at 1.695 TCF. The estimate compares to last year’s build of 5 BCF and the 5 yr avg withdrawal of 31 BCF. Early estimates for the week ending Mar 21 range from a build of 34 BCF to a withdrawal of 1 BCF with the average estimate calling for a build near11 BCF. This compares to last year’s 30 BCF withdrawal and the 5 yr avg injection of 31 BCF.
A round of below normal temps is projected across the East during the 6-10 day period. Temps will fall to low in the 30’s across the Midwest while the NE will see lows in the mid 30’s. Despite some brief rounds of cold, HDD projections are running only slightly higher than normal. A total of 111.9 HDDs are forecast in the Midwest with 104 HDDs forecast for the East.
The NWS outlook for Apr-Jun is calling for above normal temps across the entire South and the eastern 1/3 of the US. Conditions associated with La Nina weakened during February, with ENSO neutral conditions likely to develop within the next 1 to 2 months.

The 7 day average for LNG feedgas demand is just under 16 BCF/day, which includes today’s estimate of 16 BCF/day. Growth this month has been driven by the Plaquemines terminal which ramped up last week and hit an all time high of 1.82 BCF/day over the weekend. Feedgas demand is expected to average 15.9 BCF/day over the next 2 weeks.
Trade is weaker this morning with the market giving back more than half of yesterday’s gains.
Technical Analysis

The April 25 natural gas contract closed higher for a 2nd day on Wednesday gaining .195 (4.8%) to close the day at 4.247, settling just above the 10 day moving average.
Volume was light at 149,299 contracts which likely indicates short-covering was partially behind yesterday’s rally.
There so far has been no follow through buying in today’s early trade with the April contract currently down .050.
Trend following indicators remains mixed. Moving average alignment is bullish but trend following oscillators are neutral with the long term index bullish and the short term index bearish.
Bearish divergences (new price high, lower price high) have formed on the daily RSI and short term trend following indexes which typically occur near price highs.
A breakout above Wednesday’s 4.259 high will turn 4.470-4.480 into the next area of resistance followed by last week’s 4.901 high.
Weekly low support is at 3.970 followed by the 40 day moving average at 3.880. A close under the 40 day average will turn the trend back down.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 53.85






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