SMC NatGas Weekly Summary

Summary for Week Beginning March 28, 2021

 

Current Situation

The futures market was resting 6½-cents lower than the previous week at $2.535, after a week where the market initially gapped down .04 cents to open the week at $2.558. It fell to the low of the week at $2.422 Thursday morning, only to recover much of the week’s losses on Friday despite a bearish storage report. As such, the downward market swing that began from $3.316 on February 17, ultimately extended as much as another 16 cents and remained operational. Looking ahead, we said that seasonal timing and Friday’s market recovery activity were making the case for an upward reversal out of this five-week trend.

As to how the latest week turned out, the 6-10 day and 8-14-day temperature forecasts shifted a little milder over the weekend and the market initially opened about .03 cents lower, at $2.507, and headed lower on Monday. However, it couldn’t make it down to the previous week’s low of $2.422 and quickly recovered back up to $2.592 Monday afternoon. It then proceeded to consolidate in the low $2.50s before the storage report. The Thursday EIA storage report was bullishly 11 Bcfs above expectations, and the market popped back up to challenge Monday’s high of $2.592. But with the supply/demand still leaning to the looser side, it was unable to break above $2.592 and fell back slightly on Friday to close the week at $2.557. With the entire week representing only some upwardly biased consolidation, we didn’t end up with the sharp upward reversal that had looked to be in the offing.

Factor Summary

  • Supportive: storage; oil
  • Neutral: supply/demand; cash; tech considerations
  • Negative: weather; seasonal forces

Conclusion

As to how winter seasonal movement is turning out, we have seen two very distinct swings this January-March winter season. The first upward swing began off the December 28 low of $2.238 and peaked fairly late on February 17, after a $1.08 move to $3.316. The first downward swing began off the February 17 high of $3.316 and has now extended as much as 89 cents to as low as $2.422 on Thursday, March 18.

As to where we are in regard to our downward market swing, while the market did initially try to reverse to the upside last Monday, the attempt ended up being muted, with only the gap above the previous week’s high being filled before it ran out of steam. Thus, instead of sharp upside movement that would indicate a definite upward reversal, the week simply played out with only some upwardly, biased consolidation reaching upward to $2.592. With such indecisive market action, we consider that the door is still open for our first downward swing to resume.

As to the coming week, the NYMEX natural gas futures market is currently resting about .02 cents higher than the previous week, at $2.557, after a week where the market initially attempted an upside reversal only to end up with a week of upwardly biased consolidation that provided little insight on coming market direction. Looking ahead, seasonal timing still favors an upward reversal within the next 10 days, but in the meantime, fundamentals and charts still are conducive for one more attempt at extending the first downward swing somewhat further. As to all factors affecting natural gas futures, please see the factor summary above.

 

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Disclosure: The risk of loss in trading futures and/or options is substantial. Past performance is not indicative of future results. The information in this message derived from third-party sources is believed to be accurate and reliable; Coquest does not guarantee the accuracy or completeness of the information. Opinions expressed in this material are subject to change without notice. This report should not be interpreted as a request to engage in any transaction of futures, options, and/or OTC derivatives. The information contained in this material is not to be relied upon in substitution for the exercise of your independent judgment. Seek independent financial, tax, legal, and accounting advice from your own professional advisers, based upon your particular circumstances.

 

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