Gas prices extended the downside on Friday with Feb futures falling to a 3 week low as forecasts provided further confirmation of a return to above normal readings over the coming week. Warmer trends should persist longer than initially thought with the stretch of very warm weather continuing through at least the very beginning of Feb. The Feb contract settled 17.8 cents lower at $2.519. For the week, the spot month was down nearly 24%.
Total demand is estimated this morning at 142.8 BCF/day. This is nearly 16 BCF/day lower than Friday’s estimate of 160.1 BCF/day. The majority of the fall is due to an 11.3 BCF/day drop in res/comm usage to 48.8 BCF/day, down from Friday’s level of 60.3 BCF/day.
Consumption will continue to plunge over the next 2 weeks as temps warm significantly. Platts estimates demand over the next 7 days will average 122.9 BCF/day with their 8-14 day average estimate at 123.4 BCF/day.
LNG feedgas demand has rebounded since falling below 10 BCF/day last week. As of this morning, feedgas demand is estimated at 13.9 BCF/day. Platts forecasts feedgas demand will average at precisely this level over the next 2 weeks.
The spot February 22 natural gas contract closed down every single day in last week’s trade losing .793 (24%) over the course of the week to settle Friday at 2.519.
10, 40 and 200 day moving average support levels were broken last week turning the primary trend sideways to down.
The February contract has gapped lower today begin the new week of trade breaking out under the final 88% retracement support of the December-January uptrend at 2.375.
This turns the mid-December 2.235 low into the next area of support. Longer term support is the 1.944 low set in March 2023.
Over the past 7 years, a post-winter seasonal low has been set during the months of February or March.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bearish
Relative Strength Index – 37.51
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