After trading both sides early yesterday, natural gas prices turned decidedly higher during afternoon trade. A downward trend in production along with technical related buying. Producers are said to be making month to month decisions as to how much gas production to withhold from the market. Producers are currently holding back about 2 to 3 BCF/day. Oct futures settled 7.6 cents higher at $2.203.
The EIA is expected to reveal an 8th consecutive lower than normal injection for the week ended Aug 30. Estimates call for a build of 28 BCF, trailing the 5 yr avg build of 51 BCF and last year’s injection of 33 BCF. If correct, stocks would fall to 3.362 TCF, leaving the 5 yr avg surplus at 11%, or 338 BCF.
This week’s estimate is based on a 4.3 BCF/day increase in power burn last week as heat across the ME and Midcon boosted cooling needs. Lower LNG feedgas demand helped offset some of the power burn increase.
Sep is expected to be one of the mildest in the 15 years running about 40 CDDs lower than normal. Moderate weather demand is expected this week across the eastern half of the US with highs ranging from the 60’s to lower 80s. Some early season heating degree days are possible across the East during the 6-10 day period as temps average below normal. Hot conditions are likely to persist across the West through Sep 13.
The NHC is monitoring 3 disturbances that have a 40% of development this week. A system in the Caribbean is advancing and could reach the southwestern GOM by the weekend.
Prices are adding onto yesterday's gains this morning. Output is providing underlying support with today’s output estimated to be down 0.8 BCF/day at 100.3 BCF/day.
Bullish price action in the natural gas market on Tuesday as the spot October 24 contract overcame early weakness after holding above 10 day moving average support.
With support holding, buyers came back in rallying the October contract to a 2.203 close, up .076 (3.6%). Volume was heavy at 221,115 contracts.
Prices are up again today with the October contract nearing 200 day moving average resistance on the daily continuation chart at 2.260.
200 day moving average resistance is followed by 2.301 weekly high resistance set three weeks ago. A breakout above 2.301 will turn the trend back higher.
40 day moving average support is at 2.115 today followed by the 10 day average which held on Tuesday at the 2.075 level.
A double bottom low may have formed on the 2025 calendar strip. There are also bullish divergences on many of the trend following oscillators suggesting a low may be forming.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 55.92
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