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By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles Normal & Redistributed
Spot month gas prices tumbled ahead of the long weekend amid a fall in overseas prices and forecasts for moderating weather and demand. The Oct contract settled 47.6 cents lower at $8.786. For the week, the spot month lost about 5%, marking the biggest drop since the week ended Jul 1. Prices continue to fall this morning with Oct futures trading down more than 35 cents following record high production levels this weekend.
With European storage more than 81% full, prices are coming down hard. In the US, storage levels are at an 11.5% deficit however more shoulder season weather conditions should help boost injections going forward. Early forecasts for this week’s report suggest a build of 52 which would fall 13 BCF short of the 5 yr avg.
Three weather disturbances are currently being monitored however none appear to be a threat to land as they move away from the US.
Hurricane Danielle formed on Friday in the central Atlantic while the tropical disturbance east of the Lesser Antilles strengthened into TS Earl on Saturday. As of this morning, Hurricane Danielle was expected to weaken while Earl approaches hurricane strength over the next few days. A tropical depression could form in east Atlantic later this week.
The October 22 natural gas contract is down nearly 3% in today’s early trade after closing down for a 2nd consecutive week on Friday.
After losing .483 or 5.2% last week to close Friday at 8.789, the October contract is currently .250 lower today as it tests 8.480-8.500 support.
If 8.480-8.500 support is broken, the 40 day moving average at 8.370 will become the next downside objective. If 40 day moving average support is reached and fails to hold, the primary trend will turn back down.
The 10 day moving average which held as daily high resistance on early strength is at 9.115 today with the current overnight high at 9.126.
Technical Indicators:
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bearish
Relative Strength Index – 46.61
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