After falling by more than 5% early in Friday’s session, a late session rally occurred that boosted today’s expiring Feb contract by 6%. Early session losses stemmed from the Biden administration’s announcement to pause LNG export approvals for pending and future applications while Freeport LNG announced a 1 month long outage on Train 3. The late day rally is being blamed on short covering heading into expiration and signs of colder weather for the 2nd week of February. The contract settled 14.1 cents higher at $2.712.
Freeport LNG announced an outage Friday on Train 3 that could last about a month due to an electrical issue affecting the liquefaction unit. Feedgas deliveries to the Freeport terminal have fluctuated since the recent winter cold blast/storm. They have reported issues 5 times over the past 11 days, beyond just Train 3. The outage will likely have some impact on feedgas demand in the near term. As of this morning, Platts projects total feedgas demand at 14.3 BCF/day.
Forecasts for early February remain warmer than normal however colder temps are expected to move into the West during the 2nd week of the month. Widespread warmth is expected across the country this week with the exception of Florida into a small portion of the SE.
The start of the 6-10 day period will see much to strong above normal temps from the Rockies to the Midwest while below normal readings dominate the West Coast and SW. Cold will expand across the West as we move into the 11-15 day period while above normal temps continue across the Eastern half of the US.
Today’s expiring February 24 natural gas contract traded in a fairly wide .573 range in last week’s trade dropping to a 2.311 low on Monday followed by a rally up to a 2.884 high on Thursday.
By Friday’s close, the February was trading at the 2.712 level, up .193 or 7.7% for the week.
The primary trend remains sideways to down.
Overnight selling has erased all of last week’s gains with last week’s 2.311 low being primary support followed by the mid-December 2.235 low.
With expiration of the February contract today, the March contract is currently trading .390 below the price of the February contract which will created a massive gap on the daily continuation chart.
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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