Category: Weekly Detail

Bias Change Receives Some Confirmation

Weekly Continuation

Trade during May is an example of a price supportive seasonality that historically emerges during Q2. Prompt gas had closed above the April high during May in 16 of 20 years. On a continuation basis prompt gas closed below its 50 – day SMA every day since 01/29 (the first day of March’s tenure as prompt)…until Monday 05/11. On Friday the June contract followed suit, closing above its 50 – day for the first time since 03/12.

Although occasionally June rallies into expiration (’18 & ’22), typically during May the prompt trades to a mid – month, pre Memorial Day high. In eight of the last ten years that short – term seasonal high traded between the 12th and 23rd, before a decline through the holiday to an end of May – first week of June low. A year ago the May high traded on 05/12, the post – Memorial Day low was a little earlier than usual, on 05/28 (Memorial Day was the 26th).

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Still Churning

Weekly Continuous

This week looks a lot like last week in terms of technical insights. The consensus of technical indicators remains neutral for the third week, before that it was neutral for seven of eight weeks. Typically, the consensus will remain neutral when prompt gas is attempting to define a trading range, with a bias that fluctuates between positive and negative. Despite incremental improvement there is no discernible bias at present.

Market internals, volume and open interest, were neutral. Both increased with prompt gas little changed for the week. The view is that increased open interest while a short – term trade range is defined suggests accumulation ahead of a Q2 rally.

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Trying to Turn to Seasonal Bias

Weekly Continuous

During calendar April the May contract closely followed the tendency to weaken into the period immediately before settlement. May ‘26’s lower low on the last day of its tenure before a modest recovery most closely resembles 2024. May ’24 traded to $1.482 (which in that case happened to be a perfect test of the March Q1 low at $1.481) before going off the board at $1.614.

Similar to this year volume was drying up…suggesting that prompt gas was constructing a significant low, but there was a notable difference in the premium afforded to the new prompt. June ’24 opened its first day as prompt at $1.923, leaving an “expiration” gap between $1.628 and $1.916. This year the gap is $2.578 – $2.592. That difference likely says something about fundamental expectations but I have no clue.

A purely technical view of the spring of ‘24 is that June’s premium enabled it to close above the March high on its first day as prompt, this then became support. This year prompt June is looking up at, and Friday began to test resistance presented by the March ‘26 low ($2.803 v June’s post expiration high of $2.821 and close of $2.780).

The takeaway may be that the gas market traded a traditional spring low coincident with May expiration as it has in a number of other years …expect something similar to those other years during spring and early summer ’26.

With the assistance of June’s premium, prompt gas traded an “outside” week reversal higher and ended the week above last week’s high. Reversals from lower lows have long been the gas market’s preferred method of communicating that an unsustainable low had been traded…the fly in that ointment is that the volume to confirm that reversal was miss.

Given the expectation of seasonal strength but the lack of volume prompt June will likely discover sponsorship well above the May expiration low while trading sideways to a little higher for most of its tenure as prompt.

A week ago, the consensus of technical indicators improved back to neutral (where it had been for seven weeks) after one week in negative agreement for the first time since the decline to the Q3 ’25 low. This week the consensus continued to improve.

Last week the primary momentum indicators, the weekly calculations of the MACD and RSI were in negative agreement. This week there is no agreement. The “lagging” MACD is negative for a thirteenth week. The “leading” RSI improved to positive without ever reaching its extreme zone. Daily calculations ended positive…the RSI after closing with an extremely oversold reading, the MACD turned higher with the potential bullish momentum divergence mentioned in the last couple of weeks.

Market internals, have gradually improved over the last two weeks were mixed. Volume fell a little week over week, but that decline can be attributed to only 252,472 contracts changing hands as May traded to a lower low before going off the board. Even with that, average daily volume of +/- 356,500 contracts was only about 4,500 lower.

Major Support: $2.640-$2.57
Minor Support/Resistance : $2.87-$2.84, $3.16-$3.148, $3.136, $3.02-$2.97
Major Resistance: $3.35, $3.486-$3.494, $3.567, $ 3.736

Price Headed to Lows Into Expiration

Weekly Continuous

Prompt gas traded deeper into a zone of mathematical support derived from the decline from the February expiration high and has done so by closing lower in six of the last seven weeks (the only exception was week ending 03/27 when prompt gas closed unchanged from the previous week)…and on a continuation basis twelve of the fourteen weeks since prompt February printed $7.827 before going off the board at $7.460. That persistent decline has left the gas market oversold and approaching but not yet closing into its historical EXTREME zone and 26.7% below its 40 – weeks SMA.

A week ago, the consensus of technical indicators, which had been neutral for seven weeks with a fluctuating bias, was negative for the first time since the decline to the Q3 ’25 low. This week with prompt gas falling to the lowest weekly close since August ’24 the consensus improved, back to neutral.

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In Search of a Low

Weekly Continuous

May was offered through the August 2025 low, to the lowest price traded since November ’24, and into the zone of support mathematically derived from the continuation decline from the February high before recovering to end the week with a gain. While modest, .026…the higher weekly close was the first for the May contract and on a continuation basis since March 10th. The recovery from a lower low to close back above the ’25 annual low had the look of a rejection of prompt gas below $2.60, but rather as probing for a lower price level that was rejected last August. Volume for the week was higher (modestly), and while technically positive (with the rally) comes with a caveat.

The satisfaction of a mathematical objective (test of mid term support), recovery from a lower low to close back above a previous significant low, and the unwinding of “bear spreads” (talked about a couple of weeks ago) are characteristic of the gas market attempting to define a seasonal low (I am just not convinced we won’t see a test of $2.60’s again). Volume over the last three days was significantly less than during Tuesday’s decline to the first daily close below $2.622 (the ’25 annual low)…and even though the prompt managed a close above short – term declining trend line resistance that violation was not accompanied by a volume increase. I would expect a small rally which will likely fail at resistance (numerous places up to and including $3.00), then likely retest the water in the $2.60’s.

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Market Succumbs to Intermediate Support

Weekly Continuation

Prompt May traded through and closed below the continuation February and March lows and did so with increasing volume and open interest, then continued to fall to test the August Q3 ’25 – 2025 annual low ($2.622).

The lowest weekly close during 2025 was 2.692, this week’s close at $2.648 decisively violates the weekly closing support, but lower volume during than the third week of August (2,082,932 v 2,345,182) indicates fewer willing sellers than there were at the Q3 low. Even so, the highest weekly volume total in four weeks (since 2,509,774 contracts traded during week ending 03/20/26) suggests that the initial test of the ’25 low is likely that May will be offered lower during the coming week. This week’s close was the lowest since prompt December ’24 closed at $2.525 on 10/25/24 and volume was also higher as that low was traded.

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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.

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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.

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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.

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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).

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