Author: Willis Bennett

Market Above Surface — Treading Along

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Storage report provided little impact on prices yesterday as the treading continues. If your active trading you have to be patient and work the larger points of support or resistance to initiate positions. The general market is bullish (higher highs and higher lows) and the seasonal is bullish as we are in Q4 which historically brings strength. Fundamentals show a bunch of gas in the storage as we head into winter, production remains at summer highs, and the only wild card is LNG (been strong of late and growing). Good luck picking your direction as the market is in the middle of the Dec range.

Major Support: $3.25, $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.48, $3.536, 3.59, $3.65

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Slight Retrace but Not Enough Yet

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Developing a new word instead of the old range bound that I have been using for the last few month– how about “treading”. Treading up then to tread down only to end up at the same place on the hamster wheel. So here we sit waiting for some key piece of information (likely fundamental) that will lead to some directional bias and volatility. Did I mention the storage report is coming out tomorrow.

Major Support: $3.25, $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.48, $3.536, 3.59, $3.65

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Has the Low Side of Dec’s Range Been Defined?

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Not sure if the low yesterday will end up being the low for the Dec contract but it was a good start. Not trading down to the close of the Nov contract is important but not critical. In fact it does set itself up as a support zone for the life of the Dec contract. The technical explanation for yesterday is prices tested support on Monday only to run short of additional sellers yesterday and with some supportive fundamental data the mood of the market swung to the bullish bias. Keys will be how long this bias remains in the market.

Major Support: $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.48, $3.536, 3.59, $3.65

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Expected Declines

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As discussed in the reports yesterday, prices declined to absorb some of the premium afforded to the December contract but not convinced that that the premium will not be reduced some more. Keep your eyes on the Continuous price charts as they will reflect where the market may go rather than the prompt chart provides.

Major Support: $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59, $3.65

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Nov Well Bid Into Expiration

Weekly Continuous with Volume

After selling lower prices could not far enough to close the gap from the Sept 28th expiration low and gap ($2.781 – $2.820), soon to expire November flipped, rallied, and filled the gap on the high end from the previous week and then extended the rally another +/-$.20 before fading into expiration. Even with the decline from $3.401 to settle at $3.164 November went off the board $.265 above last week’s close and at the highest contract settlement value since January ’23 at $4.709 in Dec ’22.

Mentioned in the Daily and Weekly reports of the tendency for prices to return to test the breakout level of support (resistance once violated becomes support if the breakout is valid). Prompt gas followed that technical script closely, but while that was going on November remained confined in a range it had created and discussed last week, trading between $2.825 and $3.485. Just before October expiration November tested the lower boundary of that zone. Two weeks after that successful test it tested the upper boundary of that range (trading to $3.471- just short of its August high. The Nov prompt’s strong rally into expiration, a very rare event in 2023, fell well short of that upper boundary $2.401 vs $2.471, and the settlement at $3.164 was just about midway within that range.

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Dec Takes Over As Prompt

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We now get a flavor for December leading the charge of trade. The weakness from Friday in Dec seems to be brought over to late Sunday trade. As mentioned in the Weekly section, the expectation for some of the gap from the expiration trade and the Dec trade should be challenged. The $3.164 expiration of Nov will provide a key near term zone.

Major Support: $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59, $3.65

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Storage Report Provides Volatility

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I suggested earlier in the week that the range trade issue might need the storage report to provide bias. What was surprising, was the bearish report providing the reason for a bullish run? Not sure what that is all about but if you are waiting to buy — be cautious as the Dec contract did not rally equal to the Nov run and the difference between Dec and Nov declined to a low of $.25 (the lowest of the year) suggesting that the move in Nov is not an indication of upcoming winter prices. That will get further definition as the Dec takes over as prompt.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.185, $3.42-$3.48, $3.536, 3.59

Just Can’t Muster the Commitment

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So close to both ends of the range trade but prices don’t have the commitment to break through either direction. Perhaps — this will lead to anther calm expiration but you never know with options expiring on the storage report this Thursday. That event may lead to some volatility, because this market, currently, is not showing any bias direction.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Consolidation At Low End of Range

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Prices spent yesterday trading in a less that $.10 range which the market may be signalling a consolidation period while it absorbs the large losses in the past 6 trading days (nearly $.50). As discussed in the Weekly section, prompt month is not my center of focus, but rather the December contract and the hefty premium to Nov contract that it currently enjoys.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Starting To Evaluate Length

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With prices gaping lower last week, prices were destined to challenge support levels from the summer. Discussed the week’s action and the ramifications, in the Weekly section and now this week we will look at the expiration of the Nov contract. Guesses suggest that a range has developed between the two gaps but the gaps also provides great targets. Generally, there remains a bullish bias to trend as there are a series of higher lows with higher highs– but the December premium gives me pause for serious length.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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