Spot month gas prices settled lower Wednesday following a somewhat volatile session. While LNG feedgas demand continues to rebound in the wake of Hurricane Francine, production levels are struggling to recover at the same pace. The market had a limited reaction to the Fed’s decision yesterday to cut interest rates by 50 basis points. The move could be supportive to the economy, and in turn, energies. Following a higher start, Oct futures settled 7.3 cents lower at $2.284.
Today’s storage report is expected to show stocks rose by 56 BCF in the week ended Sep 13, which compares to last year’s build of 62 BCF and the 5 yr avg build of 80 BCF. If correct, stocks would rise to 3.443 TCF, 5.9% above last year and 8.6% above the 5 yr avg.
Storage builds should grow successively in the coming weeks. Projections for the week ending Sep 20 suggest a build of 62 BCF which would once again fall short of the 5 yr avg injection of 88 BCF and the year ago build of 82 BCF.
Forecasts this morning have trended slightly cooler vs yesterday from Texas to the Midwest and warmer in the South and Interior West. Above normal temps are expected early in the 6-10 day period across the Midwest ahead of colder air while the Rockies and Plains see a round of below normal readings. A brief round of below normal readings are projected across the East before more normal conditions move in.
Tropical development is possible in the western Caribbean early next week however models are not in agreement with timing and track. Most forecasts do suggest the system will move into the Gulf of Mexico during the latter half of next week.
Total demand is coming in higher this morning, up 1.8 BCF /day at 100.8 BCF/day. The increase is mostly a result of stronger power burn, which is up 1.2 BCF day over day, followed by a 0.4 BCF/day rise in res/comm usage.
Nat gas prices are trading lower ahead of weekly storage data.
The October 24 natural gas contract has closed lower the past two sessions closing Wednesday at 2.284, right on daily continuation chart 10 day moving average support.
The 10 day average has been broken on overnight weakness turning the 200 day average at 2.230 into the next area of support.
Longer term 40 day moving average support is at 2.135. A close under this average will turn the near term trend back down.
The trend at this point still favors the bulls with bullish trend following indicators and decreasing volume on recent weakness. This likely indicates profit-taking following a two week rally higher.
2.400-2.410 remains “breakout” resistance. A close above 2.410 will turn 2.500 and 2.650 into the next areas of resistance.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -52.93
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