October challenged the upper boundary of the macro trading range subset that has confined the prompt since early July and the result was the same. Prompt gas reversed lower with a substantial increase in volume. Last week a reversal on 09/03 from a high of $3.026 was the highest volume day last week by a significant margin. The 9/08 reversal from $3.014 traded with the highest turnover since 07/09. Add the 07/23 reversal from $2.991 and there are three reversals from a zone $.035 wide over 36 trading days. That’s about as clear a definition of resistance as the natural gas market ever provides.
For the last couple of weeks, I have discussed the traditional seasonal pressure that has historically bracketed Labor Day. Arguably, that seasonal pressure had already been discounted during selling into a Q3 seasonal low in late August and particularly into September expiration. It appears that in ’26 it showed up right on time. From the pre Labor Day reversal high at $3.026 prompt gas has traded as low as $2.753, about 9%…which considering that October contracts have rallied through the holiday the last two years, is not far from the 10 – years average. Typically, during calendar September prompt gas rallies from a post Labor Day low followed by range trade into expiration. A year ago, October rallied through the holiday period after prompt September traded the Q3 and ’25 annual low a few days before. After extending the rally to $3.198 on 09/08, October spent the remainder of its tenure chopping and fading in a range about $.40/dt wide, but did not come close to testing the August low even though it went off the board discount to September settlement ($2.835 v$2.867).
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