Natural Gas Rallies Ahead Of East Coast Storm
Today’s Spotlight Market
The release of the Energy Information Administration?s (EIA) weekly gas storage report showed a large Gas draw from storage but not as much as analysts expected. The EIA reported a storage draw of 178 billion cubic feet (bcf) last week to 3297bcf. Market participants were looking for a draw of between 180 and 185 bcf. Gas supplies remain ample for this time of year and are currently up 16.7% from the 5-year average.
Fundamentals
Natural Gas futures are starting to buck the trend of sharply lower energy prices as the market has moved off of recent lows. It appears that traders have finally realized it is winter and have started to anticipate larger draws of gas from storage to meet heating needs. Analysts were looking for a Gas draw from storage as high as 185 billion cubic feet last week, which would be the largest draw this winter. Weather forecasts calling for a major winter storm to affect parts of the East Coast this weekend may also be lending some support to nearby futures with the anticipation of increased heating demand for the areas affected. The National Weather Service sees the potential for a large winter storm to move through the mid-Atlantic region beginning this afternoon, with the potential for some areas to receive as much as two feet of snow from this system. The Baltimore and Washington D.C. areas are expected to be among the hardest hit regions, with lesser amounts but still significant snowfall totals seen as far north as New York City and Philadelphia. While winter storm threats are helping to support Gas prices, longer term forecasts are calling for above normal temperatures to return to the eastern half of the U.S. heading into early February.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for February Natural Gas futures, we notice a potential bull flag formation developing. Trading volume was declining during the formation, which helps to add legitimacy to this technical pattern. However, we will need to see a breakout to the upside on higher than average volume for confirmation. Prices are still below the 20-day moving average and the 14-day RSI has weakened to a more neutral reading of 42.97. 2.044 is seen as the next support level for the February futures, with resistance found at 2.495.???
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