SMC Weekly Summary

Summary for Week Beginning 11/22/2020


Current Situation

In our last report dated 11/15/20, we noted that from a seasonal standpoint, we considered the market to be in the October-December pre-winter seasonal timeframe with a first pre-winter seasonal recovery phase completed at $3.396 on October 30 and an anticipated November pullback phase now operational with a low point thus far at $2.821. We evaluated what had just been a week of upwardly biased consolidation to try to determine whether the pullback phase was complete or had further to go. We concluded that with more mild weather and bearish shifts in cash and supply/demand, we would look for the November pullback to resume.


As to how the latest week turned out, temperature forecasts remained absent of any normal cold, and the market gapped down a significant $0.12, to open the week at $2.871 and then resumed the November pullback phase. Downward movement was sharp with an extension down to $2.538 before the Thursday EIA storage report. While the report showed a very bearish build that came in 16 Bcfs above expectations, the market held up surprisingly well by only extending a little further to $2.525 before engaging in some modest recovery, to close the week at $2.65. By holding up after the bearish report, there appeared to be very strong support in the $2.50 area as well as some nervousness about how long our stretch of mild weather could continue.

Factor Summary

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


We are now in the October-December pre-winter season when the overall seasonal tendency is for recovery movement. At this point, we will cite seasonal timing and technical considerations and offer our opinion that the $2.50 area is very likely to hold. As such, we look for our current November pullback phase to end and an anticipated second pre-winter recovery phase to get underway. Essentially, the strong seasonal tendency is for the market to mount a second recovery of some degree by the last week of November. Such phases can be enduring or brief, depending on December weather. Thus, if next week’s forecasts suggest a bullish shift from the extremely mild regime, we’d look for much of last week’s losses to be recovered; on the other hand, if mild weather continues, we would just look for some upwardly biased consolidation.

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