Prompt gas closed lower for the sixth straight week (each week since the peak of the seasonal rally to a mid – December high – a one week uptick following a two week decline from the November high). Over those weeks, on a closing basis, prompt January and then February have fallen from$7.024 to $3.174. That kind of decline is not unprecedented, but it is rare and it has been a long time since last occurring.
There are other mathematical indicators that are used to monitor the overbought/oversold condition of the market, one such tool looks at the percentage the market trades as compared to the 40 week Simple Moving average. At Friday’s close prompt gas was 53.7% below the now declining intermediate – long defining moving average. You may recall at the high weekly close during August prompt gas was 54.5% above the 40 – week. Over the history of natural gas trading there has only been one other comparable rally and decline that carried to similar extremes.