Category: Weekly Detail

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.

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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.

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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.

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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.

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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.

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Bearish Bias Likely to Continue

Weekly Continuous

Prompt gas traded to a gap lower to begin the trading year on the second trading day of 2026. February managed to fill that gap after testing rising trend line support (from the August – September – October lows), but could not rally further than the violated continuation 40 – weeks SMA and last week’s close before reversing lower. February’s second test of rising trend line support was a resounding failure-the prompt plunged to the lowest price in eleven weeks, and did so with a substantial increase in average daily volume and open interest.

Looking to test the long – term defining uptrend line drawn from the ’24 – ’25 lows would occur coincident with maturity of the short – intermediate term cycle (and the anniversary of the March ’25 price spike) in mid – March. The current value of the slowly rising trend line is +/- $2.930. The current value of the March contract is currently $.535 discount to the prompt, and is well below that support zone. March is currently testing the continuation August low ($2.622 v $2.634, March’s 01/09 close).

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Two Weeks in One

Weekly Continuous

The analysis and comments on the market and its behavior will look at the entire two week period of time from my last Weekly published on Dec 22nd (before the Holidays).

January traded it’s pre – expiration low at$3.797 before nearly a dollar rally into expiration ($4.721) and going off the board at $4.687. Settlement was $.263 higher than December and the highest monthly contract settlement since January ’23 at $4.709. When January went to settlement February was offered at $3.986, creating a $.701 discount. February is typically offered at a discount to January, but $.701 is historically a little excessive. A year ago at January expiration Feb was $.234 discount to the expired prompt. Readers will likely recall that the new prompt gapped higher then retreated to close that gap before surging to a January high of $4.369. After volatile trade…that continued through the end of Q1, February ’25 went off the board at $3.535…a little more than a dime discount to January settlement.

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Wild Price Movements

Weekly Continuous

As expected the price action is hard to analyze from a technical perspective with the lighter trade (volume and open interest) during the Holiday period. One element that should be respected that even with the nearly $.40 discount of February to the January contract the prices have stayed with in the range established in Q4. Would continue to expect this trend to hold during the last day of the January as prompt.

Major Support: $3.82, $3.75 $3.654,
Minor Support/Resistance : $3.75,$3.65
Major Resistance: $4.00, $4.095, $4.16

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Price Presses Downward

Weekly Continuous

For several weeks while the market rallied to higher and higher highs the consensus of technical indicators steadfastly refused to acknowledge the price ascent with positive agreement. The last two weeks the consensus is neutral but with a deteriorating price negative bias. Once thing that the decline accomplished was neutralizing the extreme condition of momentum indicators

Volume two weeks ago the high last (the fourth highest volume week of ’25, 3,674,237 contracts) increased significantly (3,972,672). That is nearly 300,000 contracts increase while prices fell indicates that cause is being built to go lower which was confirmed last week. Price may well fall further (especially around expiration). Fun info- volume during calendar November was less than in October while price was higher, which is a volume divergence. That anomaly indicates that the sponsorship for $5.50 – $6.00 gas did not exist yet.

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