Natural gas prices traded back and forth between positive and negative territory yesterday before ultimately settling lower on the day. Profit taking occurred following a near 33 cent gain over the past 3 sessions. Yesterday’s see saw trade was largely in response to concerns over an impending hurricane expected to make landfall in NW Florida tomorrow while easing demand further pressured the market. The Oct contract settled 6.2 cents lower at $2.551.
The trend of a shrinking storage surplus looks to continue with tomorrow’s storage report expected to show a smaller than normal injection of 55 BCF for the week ended Sep 20. This compares to last year’s build of 82 BCF and the 5 yr avg build of 88 BCF. Thus, the 5 yr avg surplus would decline to about 7% to 241 BCF while the year ago surplus would fall to 5%, or 167 BCF. Weekly consumption rose last week while supply held near flat. Another lower than normal injection is projected for the current week.
Feedgas flows fell yesterday to 11.7 BCF/day with the decline mostly due to annual maintenance at Cove Point LNG which runs until Oct 10. Feedgas demand is estimated today at 12.2 BCF/day.
Tropical Cyclone 9 strengthened into Tropical Storm Helene yesterday and is projected to intensify into a Cat 2 hurricane sometime today or tomorrow. Helene is expected to enter the eastern Gulf later today as it turns north. The storm’s path would spare Gulf Coast LNG terminals however gas supply in the Gulf is at risk. Cooler temps from the storm should reduce gas fired power generation.
Nat gas prices continue to advance this morning on concerns that Helene will cause production to falter. On the flip side, Helene should dampen demand as it brings cooler temps and strong winds that will likely result in widespread power outages.
The October 24 natural gas contract turned back lower on Tuesday following a 3-day rally higher losing .062 to close the day at 2.551.
Volume was very low at 61,695 contracts likely indicating long profit-taking behind weakness in Tuesday's session.
A dark cloud cover Japanese candlestick was posted on Tuesday which will need to be confirmed with lower trade today. This could indicate continued weakness near term.
The longer term trend at this point remains up with Tuesday’s 2.674 high which coincides with the 61.8% retracement resistance of the June-July downtrend at 2.650 being primary resistance.
A close above 2.650 resistance will turn the 78% retracement at 2.860 into the next area of resistance.
2.500 is near term support followed by the 10 day moving average at 2.420.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 65.70
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