Last week’s trade was largely focused on Hurricane Francine which made landfall Wednesday in Louisiana as a Category 2 storm. Francine pushed LNG exports below 12 BCF/day, caused power outages to about 400,000 customers and pushed production to less than 100 BCF/day. The downturn in demand and bullish impact to output caused prices to fluctuate throughout the week. While Thursday’s storage data provided a boost to prices, a portion of those gains were reversed heading into the weekend. Friday’s trade left the Oct contract down 5.2 cents to settle at $ 2.305.
The natural gas rig count rose by 3 last week to a total of 97 rigs. This is down 24 rigs from a year ago.
Production levels last week fell to a low of about 99 BCF/day, leaving output down more than 4 BCF/day from summer highs. Platts pegs output this morning at 99.9 BCF/day, down from Sunday’s estimate of 100.3 BCF/day.
Output is expected to remain relatively unchanged over the coming months as producers maintain curtailments. The latest STEO from the EIA projects dry output to average 104 BCF/day in Q4 2024, up from the Q3 average of 103.3 BCF/day.
Temperatures are expected to remain above average over much of the US into the end of September. Today’s 15 day outlook from Maxar pegs CDDs to total 92.6 which is down from Friday’s outlook but still well above normal. The same time last year yielded 82.6 CDDs. The next 10 days will feature a ridge over the Plains and Midwest, leaving temps above to much above normal. Highs will peak in the upper 80’s in these regions while Texas remains unseasonably warm with highs peaking in the mid to upper 90’s.
Prices are currently trading higher as LNG export demand has bounced back, coming in this morning at 13 BCF/day, up from Friday’s 11.5 BCF/day.
As for the tropics, Tropical Cyclone 8 is churning offshore near the Carolinas. This system is likely to make landfall later today in South Carolina, possibly as a tropical storm. Tropical Depression Gordon poses no threat as it moves over the Central Atlantic.
The October 24 natural gas contract rallied up to a new 2-month high at 2.407 on Friday but sold off into the close ending the day at 2.305. For the week, the contract was up .051.
Overnight selling has dropped the October contract under former 2.300 resistance as support but buying has come in at 10 and 200 day moving averages at 2.235 (200 day) and 2.250 (10 day average).
The trend at this point remains sideways to higher with the 2.400-2.410 being near term resistance.
A breakout above 2.400-2.410 will turn 50% retracement resistance of the June-July downtrend at 2.500 into the next area of resistance.
A close back under 10 and 200 day moving average support at 2.235-2.250 will turn the 40 day average at 2.125 into the next area of support. A close under the 40 day average will turn the trend back down.
Trend following indicators remain in a bullish alignment and long with the 10 and 40 day moving averages supporting higher prices.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -56.21
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