Author: Willis Bennett

Range Is Working

Daily Continuous

The first two (almost three) weeks of February gave us consistent ranges to trade gas and provided some decent revenue. Will wait patiently to see if March provides the same opportunity. Will need to see where the support is (here or below down to $2.65) to bring out some low risk buying. Already know the high end of near term range is $2.85-$2.94 up to $3.00. Now we need to find where the low end resides.

Support:$2.764, $2.74, $2.65, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.85

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March Settlement – Highest of Q1

Weekly Continuous

Of the last thirty years, there has been five other years that March settlement was the highest of the Q1 (historically weak period) months — ’03, ’05, ’07, ’08 and ’13.  In that 5 year sample only March ’03, which went off the board at 9.133, was the highest settlement of the year.  Multiple monthly settlements exceeded March’s in the other four years, higher Q2 prices were traded in all and all eventually traded to highs higher than that of the previous year’s Q4 high. March settlements were part of an uptrend that had begun during the spring or summer of the previous year and had not yet entered its ending phase.  If you recall, I mentioned history last fall about the strength of the Sept contract during August from a historical perspective. Being honest, ’13 was in the group mentioned about the perspective for higher trades in winter and the highs were set in Feb ’14 after that strong Aug showing. The market did set a “high” in Feb this year but with the differed months continuing to show strength– I am not convinced that the rally is over.

Monthly Continuous

Support:$2.764, $2.74, $2.65, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Declines Continue Through the Week

Daily Continuous

Prices continued to decline on Friday making lower prices in four of the last five days. Testing the support zones during the day, prices bounced and rallied during the day trade. Would correlate that action to testing the support and garnishing the support to rally from. Play the ranges until the market tells us different.

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April Starts Quietly

Daily Continuous

April as prompt traded in an $.08 range yesterday– the struggle between the bullish storage report and the recent down trend turned out to be a quiet event. Doubt there will be anything dramatic going into the weekend but with natural gas — you never know. Long term analysis will be updated over the weekend but nothing has changed from the action of calendar February.

Support:$2.764, $2.74, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Subtle Expiration Declines

Daily Continuation

The expiration was lower (continuing the trend) and now the new prompt (April) faces an immediate challenge of the recent declining trend vs what is likely to be a near record storage release after the weather of last week. It may be an interesting struggle as the range of withdrawals is fairly wide.

Support:$2.834, $2.74, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$3.172

Gas Remains in “Comfort Zone”

Daily Continuous

Prices continued to the downside yesterday and into the comfort area that held trade during the calendar February. The very small gap from Feb 1st at $2.712 is likely the low for the month- therefore- expect prices to stay with in the majority of the range for February (either side of $2.82). It seems that the April contract, though a little weaker, is also staying within the comfort zone.

Support:$2.834, $2.74, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$3.172

Prices Continue Losses

Daily Continuous

It is likely that the losses from yesterday may continue into today but with the expiration on Wednesday- would not look for any major collapse. The movements have taken prices back into the range that they traded for a significant part of February and the April contract is right with the expiring March. Work the range (similar to the first two weeks of Feb) through expiration.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Price Gains Do Not Hold Through Week

Weekly Continuous

Price exploded out of the recent range trade last week, primarily fueled by the weather conditions. Breaking above the high end of the range between $3.00-$3.05 only to challenge the highs from last November and then retracing back to the old resistance area at the close. Still, prompt gas finished higher for the seventh time in eight weeks. While closing above the historically important January high- March extended the rally to test its October and November highs. The now soon to expire contract retreated from that resistance but held short – term moving average support and on a closing basis the daily downside reversal highs of 02/05 and 02/11. Prompt gas ended the week only a couple of cents above where it began…3.069 v 3.046, but with increasing volume and open interest. Price, volume and open interest moving in the same direction suggest that the uptrend is sustainable likely to be extended. Further evidence of sustaining this rally is offered by another gain in the coming summer strip that closed nearly a dime higher at 3.050. This is above highest close during October rally. Unless usually March gas gives up a significant share of this week’s gain over its last three trading days, expiration will be above the highest settlements of Q4 (November 2.996, December 2.896).

From a technical perspective, the October high is critical. Failure to trade through that high before a significant decline will not doom the bullish bias trend (discussed here in the past)but will suggest the likelihood of the perhaps long period of a trading range until prompt gas is able confirm another higher low . On the other hand- a low lower than the December low would indicate that a renewed downtrend is in progress.

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New Highs Not Confirmed

Daily Continuation

Last week’s explosion was rejected short of the highs from last November and retreated to the resistance area from where they broke out. As discussed, the rally was suspect as the gains were primarily in the prompt month and the summer differed contracts did not gain near the same pace. Only problem was the summer strip did not capitulate and closed near its highs. March is heading into expiration and the area between $2.90 and $3.10 are likely to bring volatility to trade.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Initial Collapse

Daily Continuation

Discussed yesterday about the March contract seemed to be “going it alone” in the recent run. As discussed the summer strip was not as enthusiastic for higher prices and remained calmer. Perhaps yesterday’s action confirmed why, as a significant storage number was sold into and after the release. Next week’s number will be higher (according to some who track) and while yesterday’s release put current levels at a deficit to last year next week’s release may show inventories at a deficit to the 5 year average. That is all the fundamental stuff I hear but from a technical standpoint– depending on how tomorrow closes several technical considerations may come into play.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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