Spot month gas prices settled a touch higher Wednesday as forecasts begin to show warmth receding late in the 11-15 day period. Market sentiment is still bearish overall given the next 2 weeks should see record warmth while gas flows to LNG export plants have declined. Mar futures settled 2.3 cents higher at $2.10.
Today’s storage report is expected to show a closer to normal withdrawal than the previous week’s near record pull of 326 BCF. The estimate is based on warmer temps last week, prompting total demand to decline 24 BCF week over week and production to rebound about 7 BCF/day. The market is expecting a withdrawal of 194 BCF which compares with last year’s draw of 141 BCF and the 5 yr avg draw of 185 BCF. If correct, stocks would fall to 2.662 TCF as of Jan 26.
For the week ending Feb 2, models estimate a pull of just 66 BCF. This compares to last year’s draw of 208 BCF and the 5 yr avg draw of 193 BCF.
Prices are ticking higher this morning as the market expects another strong withdrawal that will further narrow the surplus. The market will continue to monitor weather trends and any updates regarding Freeport’s outage.
The March 24 natural gas contract closed nearly unchanged on Wednesday gaining .023 to end the day at 2.100.
The trend remains sideways to down but the market could be forming a post-winter seasonal low.
Weekly low support is at 2.037 followed by the March 2023 low at 1.944.
Three point trend line support on the 60-minute chart which held on Tuesday is currently near 1.920-1.930. This is near the area the market bottomed in March 2023 at 1.944.
The 2.235 mid-December low is near term resistance followed by the top of the gap created during expiration of the February 24 contract at 2.410.
A post-winter seasonal low has been set during February or March in 7 out of the past 8 years.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bearish
Relative Strength Index – 35.87
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