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By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles
Nat gas extended gains yesterday, soaring to fresh 13 year highs as prices continue to align with global markets. A drop in daily output, stronger LNG feedgas and forecasts for cold Canadian air to move into the Midwest lent further support. May futures rose 31.7 cents to settle at $6.997.
Today’s storage report is expected to show stocks rose by a smaller than normal 15 BCF in the week ended April 8. This compares to last year’s build of 55 BCF and the 5 yr avg build of 33 BCF. If correct, stocks would rise to 1.397 TCF. The storage deficit is expected to continue widening as April weather forecasts remain colder than normal. Early estimates for next week’s report suggest another smaller than normal build of 35 BCF.
Demand levels continue to rise with consumption up another 5.5 BCF this morning at 94.9 BCF/day due mostly to res/comm usage rising 4.5 BCF on the day. Usage is expected to fall over the next 2 weeks, averaging 87.8 BCF/day during the coming 8-14 day period. LNG feedgas demand is averaging 12.4 BCF/day month to date, up 1 BCF/day from Apr’21.
Prices are holding near 13 yr highs this morning as the market awaits direction from this morning's storage report.
The May 22 natural gas contract is set to close higher for a 5th consecutive week as it gained .317 on Wednesday to close the day at 6.997.
Another high volume day on Wednesday totaling 210,551 contracts.
Open interest in the May contract has fallen sharply over the past 2 weeks from 235,066 to just 86,257 today. Open interest should be expanding in a healthy market, not contracting. Much of recent strength has been a relentless squeeze on short position holders in the market.
Prices are up again today with the late-January spike high at 7.436 being the next area of resistance.
Trend following indicators remain in a bullish alignment but daily RSI is at 82.74, in the extreme overbought area as expected given recent strength in the market.
Technical Indicators:
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bullish
Relative Strength Index – 82.74
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