Spot month prices climbed higher ahead of the weekend, rising 3% to trade at 6 week highs in anticipation of much colder weather come mid January. On top of rising demand, there were also concerns that the cold cause production freeze offs. Feb futures settled 7.2 cents higher at $2.893. For the week, prices rose about 15%.
Demand levels are expected to surge higher over the next 2 weeks, averaging about 141 BCF/day which would be the strongest levels so far this winter. Heating demand is forecast to rise between 3 and 4 BCF/day during this time, averaging more than 48 BCF/day. Total demand is estimated at 133.6 BCF for today with res/comm usage at 45 BCF/day. LNG feedgas remains strong at about 15 BCF/day.
This morning’s 6-10 forecast from Maxar shows additional cold from the Midwest to the South with a round of strong below normal temps from the Rockies to the Midwest and much below normal readings in the South. The East starts off above normal, turning colder late in the period.
Below to much below normal temps favor the East during the 11-15 day period while above normal temps are projected to return to the SW and Plains.
The spot February 24 natural gas contract has traded in a wide .200+ range in the overnight session following a rally higher during last week’s holiday-shortened trade.
The February contract gained .379 (15.1%) in last week’s trade closing Friday at 2.893.
The February contract is currently down .140 trading near 2.755 after topping out at a 2.963 overnight high.
The overnight high is technically important as it came near the 50% retracement resistance of the October-December downtrend at 2.935.
Even more important is that it held under former 7-month trend line support as resistance. With resistance holding, the longer term trend remains down.
The 2.620-2.650 area which includes the 10 and 200 day moving averages is near term support following by 2.520-2.530 which is trend line support beginning at the mid-December 2.235 low.
If 2.520-2.530 support is reached and broken, seasonal weakness into the February-March timeframe is expected.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bearish
Relative Strength Index – 54.44
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