Category: Weekly Detail

May Prompt Opens With a Thud

Weekly Continuous

May opened a little higher ($3.055 v $3.035) and printed the high for the holiday shortened week shortly after, supplies for May were on offer all week. The low, printed on Thursday afternoon was $2.779, just .004 above the continuation February low. Very well defined support (perhaps too well defined), is presented by the continuation February/March lows and this week’s early April low…$2.775, $2.803 and $2.779. May settled for the week at $2.800, just a tick or two below its February and March lows.

It is rare, at least in recent years, that prompt May trades through the continuation March low. Before the past week, prompt May had violated the March low only twice over the last ten years, last year and in 2019. A year ago, the calendar March low was $3.689. May ’25 was amply offered for nearly its entire tenure and failed to trade a sustainable low until 04/24 at $2.858, which turned out to be the last low before the traditional Q2 rally which peaked at $4.148 on 06/20.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Expiration Provides Little Bias Guidance

Weekly Continuous

April gas tested support again, but did not make it to the second targeted zone, before rallying to go off the board at $3.095. Maybe an expiring contract has settled unchanged from the closing price of the previous week sometime in the past, but I don’t remember it. Considering the volatility of the recent past, perhaps that’s a hint about equalization of supply and demand. April settled .126 higher than March. The thirty six months average settlement price (skewed a little by that adventure in February) is $2.96.

With the exception of a war related one day spike to $3.494 April was confined within a range of a little less than $.50/dt; on a daily closing basis about $.40 for its entire tenure…and almost all of calendar February. Over that period two reversal days…the 03/09 spike to April’s March high and one on 02/06, both of which ended near the lows traded those days, effectively defined near term resistance that will likely carry over to May’s tenure.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Expiration At the End of Week

Weekly Continuous

April gas traded down to the upper boundary of a zone of support between $2.775 (April’s February low) and $2.922 (where there are multiple daily lows) before rallying and failing again at another lower high ($3.270 v $3.317). Volume and open interest fell as the prompt declined . For the last two weeks the change in open interest has been technically negative. During the past week with April lower from Thursday – Thursday (open interest statistics always lag one day) the total number of contracts outstanding fell 68,613 Since open interest peaked on 02/02 (along with volume) at 1,710,172 contracts 193,844 have been liquidated. The daily closing price difference of prompt gas on 02/02 and 03/19 is $.135/dt. That seems to suggest that the gas market is absorbing substantial liquidation without a corresponding price decline. A year ago, total open interest reached a low of 1,465,145 during April just before the Q2 ’25 rally kicked off.

While the nearby contracts ended the week modestly weaker (April through November lost between $.007 and $.064). November the strongest, May and June the weakest, distant deferred gas showed considerable sponsorship. The Q1 ’27 months gained an average of $.128. Weakness in nearby contracts while distant deferred contracts gain is characteristic of “bear” spreading (the simultaneous purchase of one, sale of the other) suggesting the expectation of profiting from lower prices. “Bear” spreading works when the nearby contracts falling faster than the deferred contracts. if large participants were anticipating rising prices or a lengthy trading range, premiums awarded to deferred contracts would be expected to diminish relative to the nearby.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Gas Continues Shadowing Crude

Weekly Continuous

April gas, likely still bid in sympathy with the rise in crude (which gap-ped higher on the way to the highest trade since 06/15/22 ($119.48), $28.58, 31.4% above last week’s close), went its own way after trading a lower high. Prompt gas finished the week $.055/dt lower, April crude, which goes to settlement on the 19th, closed at $98.71, $7.81 higher. After closing the remainder of a gap left on 02/09 ($3.316 – $3.387) April gas failed at its 40 – weeks SMA well short of the last lower high traded on 02/09 at $3.659.

There is a distinct similarity to the recovery rally following the high volume 02/02 decline and the absence of volume. Between 02/03 and 02/06 prompt March rallied from $3.155 to $3.659 with declining volume (discussed here). On 03/09 March gap-ped lower. Since trading to $2.961 on 03/10 April has rallied to $3.317 (similarly gaining with falling volume). If it is not the same, it rhymes. Unless April can hold a trend line rising from the lows of the last two weeks ($2.775 and $2.867, currently about $3.051 and the trend line from July low & March low) there is an increasing likelihood of a test of the zone between the January and February lows of April gas ($2.604 – $2.775).

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Market Rides Crude Tail

Weekly Continuous

Volume expanded as this week’s rally filled a gap on the April chart left on 02/09 leaving a tiny gap between $2.766 and $2.775 still open.

The absence of volume as the new prompt extended the decline a week ago strongly suggested that the gas market was running out of sellers below $2.900 – $3.000. This week’s rally with substantially greater volume without gas reaching an extremely oversold condition supports that theory. Despite the decisive violation of the trend line rising from the ’24 – ’25 lows on a weekly and monthly closing basis, technically the market remains in a long – term uptrend. Up-trends are defined by higher lows and higher highs in different time-frames and trend lines are a convenient way to monitor their progression. The last higher low on an intermediate – long term basis was the August low at $2.622. It is likely that there will be a lot of support between that low and the to date April low, but expect it will be tested, either during calendar April or August. On a weekly basis the last higher low after a higher high was $3.006 (the January low after the December high) which was decisively violated along with the long term trend line. Last week’s rally was an intermediate term counter trend rally…a “correction” after last week’s lower weekly low and will be followed by a lower high and a test of the previous low. 38.2% retracement of April’s decline from its January high is $3.275 this week’s high was $3.280. 50% is $3.430.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Starting a New Prompt Same Range

Weekly Continuous

Prompt gas and the April contract traded an “outside” week reversal to the downside to end February below the historically important January low but did so with the lowest volume traded during any week in 2026. The low turnover…which was less than half of the total traded during week ending 01/23, does not nullify the trend line violation (which still needs confirmation) but does suggest that selling pressure necessary to drive April substantially lower is at least to date, absent. Lower price lows on lower volume is a form of divergence.

The technicals are still kind of a mess but are slowly adjusting. A week ago the consensus improved a little…to neutral, this week it forfeited that improvement and reclaimed its price negative bias.: Momentum indicators…both the weekly MACD and RSI are negative with confirmed price negative divergences. Maybe that is indicating another “leg” lower, but the circumstances of the divergences…Feb’s spike higher and March’s whopper of a discount, will likely result in that being a short “leg” and that prompt gas will begin to define the lower limits of an early spring trading range. Still, the inference is that rallies will fail.

Market internals were mixed. Volume fell along with price. As mentioned earlier, a lower price low on lower volume is a form of divergence, in this case a technical positive. Open interest increased indicating an ample supply of contracts offered at a lower price, a technical negative.

Have my second grandchild coming shortly so I will keep tonight short.

Major Support: $2.87-$2.84, $2.640-$2.57
Minor Support/Resistance : $3.16-$3.148, $3.136
Major Resistance: $3.02, $2.97-$2.93, $3.787-$3.831, $4.063, $4.086, $4.593, $5.333, $5.496

New Range To Be Tested

Daily Continuous

Two weeks ago, after February spiked to the highest settlement value for a monthly contract since September ’22, March began to make up its historically exceptional discount to an expired prompt ($3.732 v $7.460). Well – bid into the weekly close March traded as high as $4.425 late Friday, narrowing the still substantial “expiration” gap by $.436, but the enthusiasm for perennially amply offered March gas was short – lived. When trading resumed March gapped lower. With the most volume ever traded in a day (1,909,214 contracts…the previous record was 1,602,673 traded on 11/14/18 coincident with the Q4 and annual high of 2018) March continued to fall toward a bottom at $3.155 (27.5% below the new prompts close on the last trading day of January).

As March fell, open interest spiked 55,153 contracts (I don’t think that’s a record, but you can see it from there). If open interest increases as price falls it is an article of technical faith that the bulk of the selling was either short hedging of anticipated production or speculative short selling driving the bid lower (if the selling was from liquidation open interest would have fallen). While there was certainly some of both, I am pretty sure the latter was a significant contributing factor…because the following day when March rallied the total fell 54,189 contracts. A whipsaw for the ages for those folks ( illustrative of the dysfunctional state of the current market). Look for additional dysfunction in the coming month.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Large Discount for March Contract

Weekly Continuous

February spiked to the highest settlement value for a monthly contract since September ’22 went off the board at $9.353. From the January low ($3.006) February rallied $4.821 to $7.827 in seven trading days before settling at $7.460. February rarely rallies into expiration. The February expiration event most similar in recent history was in late January ’22 when the expiring prompt , which had closed the previous day at $4.233 spiked to $7.346 before settling at $6.265. Expiring February ’26 traded a last day range of $1.927, and a last three day range (from the close on 01/23) of $2.552. March gas is almost always discount to February. Last year the discount was $.365, which was pretty typical of recent years. In ’22 February was $1.982 premium to March at expiration, this year a historically exceptional $3.728.

Six times in the last twenty years March has made up that discount to settle higher than February. It did in ’25 and in ’18 (those are the last two years that March settled premium to Feb, in ‘18 March’s discount was $.464 but did not in ’22.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

EXPIRATION WEEK

Weekly Continuous

I will be honest with you when I started to write the Weekly report I had just enjoying the Denver Broncos efforts in loosing the AFC championship game (no I did not go rather my daughter and son -in – law wanted to witness the game), so I sat and started to this only to witness a moment in trading I had not in years (Hurricane Katrina comes to immediate mind) so I broke off continuing and decided to wait to publish today (Tuesday) after the fireworks were done and trading resumed – if it did. You now know why I try not to trade the expiration of a contract and mentioned last week that, I would not be trading the Feb contract and sticking with the March prompt. The following was what I was going to start the Weekly with before the abortion.

On last Thursday, after surging $2.293 from last week’s closing price (including a gap between $3.230 – $3.380), February traded through the December high. Prompt gas trading through the calendar December high during January is not all that unusual, prompt February has done that in three of the last four years. What is unusual is doing that after trading to and through the December low (technically considered an outside month). Since organized trading of natural gas began during the spring of 1990 that has happened exactly ONCE before…in January ’24 and the reversal was in the opposite direction.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Lower Low Established

Weekly Continuation

On the previous Friday (01/09) February fell $.238 while 1,084,681 contracts changed hands and open interest increased an extraordinary 53,147 contracts. The only explanation, characteristic of such extremes in market internals, is overly enthusiastic speculative short selling. On Monday the late coming short sellers were taken to the woodshed. With February gaining $.240 nearly Friday’s loss, open interest fell 37,369. On Tuesday as the prompt traded the week’s high but faded to a gain of only a penny the total number of contracts outstanding fell another 7,515. Once that bloodletting (buying to cover ill – timed shorts) was complete February suffered a $.299 loss and began the expected decline toward establishing a lower low and testing support bracketing $3.

Weather forecasts over the weekend turned dramatically bullish and the bullishness left a gap in the Holiday trade (expect that gap to be tested when forecasts modify). Prices rallied up to the 100 day SMA before backing off. Would expect that was fueled by short covering after last week’s declines.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.