Prices shed early morning gains Thursday to settle lower on the day after a near record withdrawal failed to generate a market reaction. The market instead turned its focus to recovering output levels and forecasts for unseasonable warmth heading into February. The soon to be expired Feb contract settled 7 cents lower at $2.571.
As expected, the EIA reported a near record withdrawal for the week ending Jan 19. Coming in 5 BCF higher than expected, stocks fell 326 BCF to 2.856 TCF. The draw greatly exceeded last year’s pull of 86 BCF and the 5 yr avg pull of 148 BCF, narrowing the year over year surplus to 110 BCF and the 5 yr avg surplus to 142 BCF.
Next week’s report is expected to reveal another bullish withdrawal with estimates currently ranging from 222 BCF to 238 BCF. The surplus should begin to rebound come early February.
LNG feedgas has fluctuated this past week, ranging from a low of 13.1 BCF/day on Jan 22 to 14.2 BCF/day as of this morning.
Freeport LNG announced 1 of its 3 liquefaction units will be out of service for about a month following technical issues from the winter storm.
This morning, the Biden administration announced a temporary pause on pending decisions of LNG exports. This will be taking an in depth look at the impacts of LNG exports on energy coasts, security and the environment. The pause is expected to take several months and will not impact already authorized exports.
The February 24 natural gas contract broke out above 10, 40 and 200 day moving average resistance on Thursday reaching a 2.884 morning high.
Early strength failed to hold as sellers came in late to sell the February contract down to a 2.571 daily close.
For the day, the February contract lost .070 keeping the market in a sideways to lower trend.
10, 40 and 200 day moving average resistance is at 2.665-2.675 (40 and 200 day averages) and 2.690 (10 day average) followed by yesterday’s 2.884 high.
Near term support is at 2.480-2.500 followed by 2.311 weekly low support.
The February contract expires on Monday and is currently trading .380 above the price of the March contract. There should be a huge gap lower on the daily continuation chart on Tuesday followed the February expiration on Monday as the March contract is currently trading near 2.150.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bearish
Relative Strength Index – 43.87
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