Thursday, January 10, 2019 at 4:36PM
Gas prices got going early this morning, running up towards $3.1 resistance before reversing lower into the morning's EIA natural gas storage number. Despite a fairly bullish number prices continued lower through the afternoon as the physical market lagged, with the February contract settling down about half a percent on the day. As has been the case all week, it was the March contract that lagged the most through the day. This move came despite the EIA announcing a -87 bcf net implied flow of natural gas from storage next week compared to our estimate of -75 bcf. Another 4 bcf of gas was reclassified from working to base gas, resulting in a weekly net storage change of -91 bcf. Yet not even this could save gas prices, as cash prices sunk through the morning and afternoon GEFS model guidance decreased cold risks slightly (images courtesy of Tropical Tidbits). Still, it was a jumpy day where the main story continues to be summer gas strength versus March weakness, with the February contract stuck in between as the February/March G/H spread continues ticking higher. Meanwhile, the H/J March/April spread continues to sell off and is now inside the historical range of the last few years. This comes as, even with today's slightly larger storage number, storage levels fell far less than the 5-year average of -187 bcf. Additionally, though the print was tighter than last week's pull and expectations, it was still loose to the last 10 weeks on aggregate. Now traders are focusing back on long-range weather expectations and the latest daily balance developments to determine the next move for gas prices. Despite daily moves under $2.9 and near $3.1 over the past week and a half, most recent settles have been right around the $2.95-$2.98 range, with prices proving unable to sustain any move outside this range. In our Afternoon Update and Note of the Day for clients today we highlighted which direction we saw a move as more likely, as well as what risks were to current weather forecasts moving forward. Try out a 10-day free trial here to put all this research to use.