Natural Gas Bears Out Of Hibernation As Spring Approaches
Today’s Spotlight Market
The drop in both Natural Gas and Crude Oil prices has forced producers to curtail drilling. As of February 25, U.S. Gas rigs count has fallen to 289, down 3.67% from the previous week and down nearly 15.5% from year ago levels. For Crude, the drop is even more dramatic with rig count falling to 1,019, down over 3.5% from the previous week and down a whopping 28.49% from year ago totals. The Permian Basin (West Texas and parts of Southeast New Mexico) saw the largest decline falling 125 units
Fundamentals
Natural Gas bulls were looking for a huge draw from storage last week on the basis of a late winter cold snap that plagued the eastern half of the U.S. While working gas in storage did fall by 219 billion cubic feet during the week ending February 20, traders were expecting an even larger decline and prices fell sharply following the data release. Current gas in storage is running over 42% above year-ago levels, when the so called ?polar vortex? sparked fears of a gas shortage heading into summer. Natural Gas demand since January 1 has varied sharply depending on what region one is analyzing with the east region seeing withdrawals running 5% above the 5-year average, but the west region seeing withdrawals down 7% from the 5-year average. Gas supplies, however continue to increase, with increased U.S. production as well as surging imports from Canada, keeping U.S. gas supplies running over 10% above this time last year. ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for April Natural Gas, we notice the minor uptrend seen in prices since the start of February has been soundly negated by the steep price sell-off that followed the EIA Gas storage report last week. Prices have once again moved below the 20-day moving average and the 14-day RSI has started to weaken with a current reading of 43.29. Support is seen at the recent low of 2.589, with resistance found at 3.045.
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