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Daily Natural Gas Market Update 9-6-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20240906085052-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20240906085112-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

A surprisingly low storage injection left spot month gas prices up 10% on Thursday.  Rising flows to export terminals and a continued decline in output this month also contributed to upward momentum.  Oct futures settled 10.9 cents higher at $2.254.

 

image 100260
Source: Bloomberg, CME

Weekly storage data came in well below expectations with stocks rising 13 BCF to 3.347 TCF for the week ended Aug 30. Supplies are now 323 BCF above the 5 yr avg, or 11%.  The primary driver for the report was strong consumption in the South Central region, resulting in a 14 BCF withdrawal. The Midwest and East posted builds of 13 BCF and 7 BCF, respectively.  Production last week also tapered slightly, keeping injections on the lighter side.  

A continued downward trend in output this week along with steady LNG demand is expected to result in another light injection for the week in progress.  Another 10 weeks remain in the traditional injection season with storage levels expected to peak just below 3.9 TCF. 

image 100262​​​
Source: Bloomberg

The market has seen production fall over the past 6 days, averaging 101.3 BCF/day, according to Platts.  Since Wednesday, output has come in below 101 BCF/day with today’s estimate at 100.8 BCF/day. Month to date, output is running  4 BCF/day lower than Sep 2023.  With producers maintaining production curtailments, we are unlikely to see much improvement in the coming weeks. 

​​image 100261
Source: NOAA

Prices are building onto yesterday’s gains this morning with support stemming from increased LNG feedgas demand.

The NHC is monitoring 3 disturbances heading into the weekend.  All however have a less than 40% chance of formation over the next week.

Technical Analysis 
 
image-20240906085327-3
Source: Bloomberg, CME

The October 24 natural gas contract reversed course back higher on Thursday following Wednesday’s sell off gaining .109 (5%) to close the day at 2.254.

Volume was healthy at 196,899 contracts.

The October contract settled right below 200 day moving average resistance on Thursday.  This resistance was reached the previous session but the rally failed to hold.

The 200 day moving average at 2.255 today followed by the 2.301 high set three weeks ago is primary resistance.  A breakout and close above 2.301 will turn the trend back higher.

Until resistance is broken, the primary trend will remain sideways to down. 

The 10 and 40 day moving averages are converging at 2.095-2.110 are primary support with the 40 day moving average holding as support on Wednesday’s sell off.

If 10 and 40 day moving average support levels are broken, 2.000 will become the next area of support with longer term support on the 1.856 double bottom low.

Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish

Relative Strength Index - 55.97

image 100265
Source: Bloomberg, CME
image 100263
Source: Bloomberg, CME
image 100264
Source: Bloomberg, CME
image 99753
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 99754
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 100268
Source: Bloomberg, CME
 
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