By: Heather Wine, Senior Risk Manager - Energy
Spot month nat gas extended its rally Tuesday amid broad based bullish sentiment across the energy complex while near term forecasts indicated a return of colder temps across the Midwest and East Coast by mid March. April NG settled 9.4 cents higher at $3.054.
While the eastern US will see widespread much above normal temps over the next 5 days, colder conditions will begin filtering into the Northern Plains, Upper and Great Lakes regions during the 6-14 day period.
Over the coming week, heating demand is forecast to ease to seasonal lows around 18 BCF/d. However, stronger gas fired heating demand across the Upper Midwest and NE is expected to lift res/comm usage to more than 30 BCF/d by the middle of March.
This week’s storage report covering the week ended Feb 27 is likely to be supportive following last week’s cold driven surge in demand. Total demand rose nearly 10 BCF/d week over week to more than 132 BCF/d, with res/comm usage accounting for 6.8 BCF/d of the increase. Power sector demand also increased by 1.8 BCF/d. Platts is calling for a draw of 125 BCF, which exceeds both the 5 yr avg pull of 96 BCF and last year’s pull of 106 BCF, and would reduce stocks to 1.893 TCF.
LNG flows were revised lower for both Monday and Tuesday, to 16.9 BCF/d and 17.8 BCF/d respectively, amid an outage at Cameron LNG. Production there is rebounding, with total feedgas demand estimated at 18.5 BCF/d as of this morning. The terminal continues working toward full restoration.
Prices are trading lower this morning as bearish fundamentals outweigh Middle East supply risks. Reports that Iran may be in talks to end the conflict have tempered risk sentiment, though longer dated contracts are not down as sharply, reflecting lingering concerns over protracted supply risks.
Source: StoneX
The April 26 natural gas contract rallied up to a 3.188 high on Tuesday but gave back about 1/3rd of the early gains by the session’s close settling the day at 3.054, up .096.
Second day close above the 10-day moving average on the daily continuation chart is supportive heading into today’s session.
Early weakness has the April contract retesting the 10-day moving average as support at 2.960.
A drop back under 2.960 will swing the momentum back to the downside turning 2.870-2.880 and last week’s 2.775 low into the next areas of support.
If 10-day moving average support holds, Tuesday’s 3.188 high is the first area of resistance followed by the 3.253 high set two weeks ago.
A post-winter seasonal low should be in place if last week’s 6-month low at 2.775 can hold as support in upcoming trade.
Moving Average Alignment - Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -42.80
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