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By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles
Spot month gas prices maintained much of Thursday’s rise on Friday as a widening storage deficit and strong exports raised supply concerns. May NG ended 8.1 cents lower at $6.278. For the week, the spot month rose about 10%, leaving it up for a 4th straight week.
Interestingly, the TTF contract has gone in the opposite direction during the recent US run up. European prices have dropped about 50% over the past month, while US futures have risen about 40%.
Supply concerns are a big factor behind this shoulder season rally as stocks lag the 5 yr avg by 17% and are 22.4% lower than last year. This comes as European supply concerns add further pressure to US exports. US LNG exports are on track to reach record levels this year, averaging 12.5 BCF/day year to date.
Drilling levels have picked up and production is slowly responding. Last week, gas drilling rigs rose by 3 to 141 rigs. This is up 48 rigs from a year ago. So far this month, output has averaged 93.5 BCF/day, down about 300 MMcf/day from March.
Prices this morning are rising back toward 13 yr highs as the latest 8-14 day outlook shows nearly the entire country averaging cooler than normal. Parts of the Midwest into the Midcon and portions of the SE have the greatest probability for cooler temps.
This will keep heating demand alive heading further into April. Platts projects res/comm usage will rise to 24.5 BCF/day over the next 6-10 days.
The May 22 natural gas contract has closed up 4 consecutive weeks including a .558 or 9.8% gain in last week’s trade closing Friday at 6.278.
Prices are up again today as the May contract retests the 6.538 life-of-contract high set on Friday.
Volume over the past 7 sessions has been very high with last Thursday and Friday’s volume at just under 200,000 contracts per day. This is basically double the average volume seen since early-February.
Spikes in volume can accompany market highs or lows. While the trend at this point remains up, the recent volume spike could be an early precursor to a trend turn back down.
6.240-6.250 is near term support followed by the 10 day moving average currently at 5.915.
Technical Indicators:
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bullish
Relative Strength Index – 76.61
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