Nat Gas Weekly Update: 2/9/25
Models have been having a hard time with the long range physics of the global atmospheric patterns. Which is great for those of us that can see past a computer! The models began to see this last weekend, and the price gapped higher 16 cent. This weekend they confirmed once again, and we opened 10 cents higher. There has been continued support around the 20D SMA and we are now looking at the 61.8% fib ($3.50) to become the new resistance level. But all these chart technical cannot stop the cold and the withdrawal of NG form storage. This weeks video touches upon storage and the importance of the storage/price relationship.
Natural Gas pricing is a function of fundamentals and sentiment. I use technical levels to verify if pricing is in equilibrium with fundamentals. To make sure that sentiment does not throw the supply/demand cost structure out of balance. Too high of a price and there becomes constraints on the usage, and a replacement with cheaper, dirtier coal. If the price becomes too low, then there is a cutback in exploration, production, TIL wells (which we will talk about in the future), and a decrease in well head volume. Just like this past summer when NG reached historic lows, the cure for low price is less supply. Which is why producer restraint, low rig count and a historic number of TIL and uncompleted wells helped with over storage.
The weekend models both trended 15 HDD colder, with the European still 25 HDD colder than the US model. Using the conversion of 1.6 BCF/d per 1 HDD, the US and the Euro are predicted to use more than 92.8 BCF and 128 BCF than average in the next two weeks, respectively. This would put NG storage at over 8% of the 5-year average. This is quite bullish and I expect the March contract to settle at close at or above 3.75/MMCF. It is possible for 4.00/MMCF if withdrawals hit the predicted 900 BCF for the month of February.
Keep it burning!
Natural Gas pricing is a function of fundamentals and sentiment. I use technical levels to verify if pricing is in equilibrium with fundamentals. To make sure that sentiment does not throw the supply/demand cost structure out of balance. Too high of a price and there becomes constraints on the usage, and a replacement with cheaper, dirtier coal. If the price becomes too low, then there is a cutback in exploration, production, TIL wells (which we will talk about in the future), and a decrease in well head volume. Just like this past summer when NG reached historic lows, the cure for low price is less supply. Which is why producer restraint, low rig count and a historic number of TIL and uncompleted wells helped with over storage.
The weekend models both trended 15 HDD colder, with the European still 25 HDD colder than the US model. Using the conversion of 1.6 BCF/d per 1 HDD, the US and the Euro are predicted to use more than 92.8 BCF and 128 BCF than average in the next two weeks, respectively. This would put NG storage at over 8% of the 5-year average. This is quite bullish and I expect the March contract to settle at close at or above 3.75/MMCF. It is possible for 4.00/MMCF if withdrawals hit the predicted 900 BCF for the month of February.
Keep it burning!
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