Despite record demand and production freeze offs, nat gas prices sold off again yesterday as near term cold is expected to give way to much warmer weather next week into the end of January. LNG exports also fell to near 1 year lows. The Feb contract settled 3 cents lower at $2.87.
Today’s storage report is expected to show stocks fell 164 BCF in the week ended Jan 12. This compares to last year’s draw of 68 BCF and the 5 yr avg draw 126 BCF. If correct, stocks would fall to 3.172 TCF. The next 2 storage reports are also expected to greatly exceed historical comparisons. The week in progress is expected to show a record withdrawal of 370 BCF while estimates for the week ending Jan 26 suggest a draw of 243 BCF. Based on these estimates, the surplus could potentially evaporate.
Forecasts for the final 3rd of January suggest much warmer temps across much of the US. The NWS is projecting much to strong above normal temps across the eastern 1/3 of the US while the remainder of the country will average above normal.
Demand projections reflect the late Jan warm up with total demand expected to average 124.4 BCF/day during the 8-14 day period. This is substantially lower than the 7 day average of 159.5 BCF/day.
The February 24 natural gas contract has closed down every day this week losing an additional .030 on Wednesday to settle at 2.870.
Week to date losses total .443 or 13.4% with the February contract again trading lower ahead of the weekly storage report.
2.650-2.660 remains primary support to watch which includes the 200 day moving average on the daily continuation chart as well as trend line support beginning at the mid-December 2.235 low.
If 2.650-2.660 support is reached and holds, the market will remain in a bullish uptrend with 2.950-3.020 being primary resistance.
If 2.650-2.660 support is reached and does not hold, 2.400 will become the next area of support followed by the mid-December 2.235 low.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bullish
Relative Strength Index – 49.30
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