Nat gas prices settled higher Monday on forecasts for extreme cold to settle in this weekend into next week. Demand levels are expected to rise to record highs as a result. Feb futures settled 8.7 cents higher at $2.98.
The spread between Henry Hub and the TTF contract is narrowing with the TTF contract trading lower on Monday and again this morning. While temps in Europe have fallen below seasonal norms, strong supply and storage levels are helping offset higher demand. EU storage is currently 85% full. The arrival of 3 LNG cargoes this past weekend is also loosening the balance.
Arctic cold is set to take ahold of the Interior West and Central US this weekend prior to becoming more focused over the Central and Southern US. This will be the coldest weather so far this season with temps expected to fall strongly below normal. The peak of the cold will leave low temps below zero for much of the Midwest.
Conditions will moderate late in the 6-10 day period across the West with a return to warmer readings from California to the SW. Below to much below normal temps will linger across the Eastern US through the 3rd week of Jan.
Bullish price action in the natural gas market on Monday as the February 24 contract overcame early selling to close the day .090 higher finishing the day at 2.980.
Trend line resistance and the 50% retracement of the October-December downtrend were broken on Monday keeping the market in a 3-week bullish uptrend.
The 61.8% retracement of the October-December downtrend at 3.095 has been reached in today’s trade.
If 3.095 resistance is broken, the 78% retracement at 3.325 will become the next upside objective.
The 50% retracement broken on Monday is now support at 2.935 with longer term support at 2.725 where the 10 and 40 day moving averages have converged.
Trend following indicators have turned bullish with the short and long term trend following indicators now in a bullish alignment. The 10 day moving average has also crossed above the 40 day average turning the 10, 40 and 200 day moving averages into a bullish alignment.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bullish
Relative Strength Index – 69.70
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