Category: Weekly Detail

I am traveling for the holiday and I can’t get access this afternoon for my charts so please be aware. I will try to update the charts today and publish them on the website. Due to some limitations, I doubt there will be a Daily on Wednesday continuing through the weekend.

Comments on the price movement last week and going forward through the expiration this week;

Weekly Continuous

The gains continued last week, the decline in open interest…indicating substantial short covering was a significant contributor to the rally, discussed in some detail last week, continued. Until an increase on Thursday, only the second daily increase since 10/16, the total number of contracts outstanding had fallen for ten straight days. Prompt gas closed higher on 13 of those 20 trading days and only once was there consecutive lower daily closes (three straight between 10/22 and 10/24).

The decline to Wednesday’s low total of contracts outstanding brings the reduction to 200,007 contracts (11.6%) while including a significant contribution from the premium of December over expired November ($.439) prompt gas has rallied, on a daily closing basis, from $2.938 to $4.533 ($1.595 or 54.3%). This represents an epic short covering rally.

Weekly Continuous

Last week’s gains extended the run that started with the premium afforded the December contract. Total open interest had increased substantially (86,824 contracts over five trading days) while November faded from a 10/08 high at $3.550 to a 10/16 low of $2.922, likely due to aggressive speculative short selling. In the recent weeks prompt gas has closed higher in 10 of 15 trading days with a notable contribution from December’s premium over expired November ($.439), has traded almost $1.50 higher.

December would fail at well – defined resistance provided by the trend line declining from its March – June highs and its declining 20 week SMA. It didn’t. A trend line and moving average violation like that is a serious technical positive. Mentioned it at times during Oct with the Nov contract, but did not occur. During the rally from that above referenced October low open interest has fallen from 1,721,787 contracts to 1,556,062…165,725 (through the 11/06 close, open interest statistics lag one day), 75,982 of that during the five days ending 11/06. Over the sixteen trading days since the peak of open interest the total has fallen in all but one day. To this analyst this is a great example of a short covering run in prices.

Weekly Continuous

Going to keep this abbreviated as I have other issues with higher priority. Clearly, looking at the chart above you expect commentary suggesting a reversal on the Weekly chart. Not so fast — nearly $.50 of that reversal was the premium afforded at expiration. It may prove out to be a reversal but need to witness after challenges to support. Continue to expect December to fail at resistance, specifically the trend line decline from its March and June highs and its 20 – weeks SMA, Expect December’s premium over expired November to diminish but also expect the new prompt to find substantial support between $3.60 and $3.75.

On more technical analysis expect that prompt gas has traded a higher continuation low…the September low higher than the August low, which is an essential characteristic of an emerging uptrend and the October low higher than the September low. Expect opportunities to buy support during calendar November but expect those opportunities to be fleeting.

Weekly Continuation

Some reversal earlier in the calendar month (from $3.585 on 10/02 that was confirmed by another reversal from $3.550 on 10/08 for a third time this week’s high was $3.572 and that’s a classic test of and failure at well – defined resistance looks like.

Volume on those three tests of $3.550 – $3.590 has been remarkably similar: 672,699 – 643,006 – 639,225…higher than any other of the trading days during November’s tenure except 10/20 on the gap day. Notwithstanding that a chunk of the 797,173 contracts traded was the result of some folks buying back contracts they had sold short, the gap and the volume spike strongly suggest a high volume low. When November traded into the 10/20 range and tested the 20 – week SMA, (currently the value of that moving average is $3.198, Friday’s low $3.200) it reversed higher, ending the week on a strong note.

Weekly Continuous

With the holiday today I am going to limit the commentary in the Weekly and Daily. The range traded on October 2nd was $3.402 – $3.585. November managed a higher close on Tuesday ($3.519) but volume was about 60,000 contracts less than the 10/02 reversal day. After extending the recovery to $3.550, .03 short of last week’s high, November collapsed (putting another high volume reversal day in place and further defining and strengthening the resistance zone. Total open interest fell on both the 10/02 and 10/08 reversal days, which strongly suggests that short covering and contract liquidation were significant contributing factors. Simply put, there was not nearly enough buying interest for prompt gas above $3.500 to support further extension of the rally or to prevent the significant reversals to the downside.

For the last nine weeks November has been confined in a well – defined range between +/- $3.10 and $3.50. The last weekly close outside that range was the first Friday of August. Last week, since trading the two daily lows that began construction of the lower boundary of the range, the current prompt has been briefly offered below that lower boundary twice…consecutive days on 09/22 & 23, and has now failed twice above the upper boundary. This week’s lowest close with the highest volume of any week during the consolidation is an indication that November will be offered lower again.

Weekly Continuous

Discussed the large premium last week on the expiration of the October contract and rather than immediately build on that exceptional premium, the new prompt began the week by opening lower, $3.149 vs last week’s close at $3.206, still a premium of $.314 to October settlement. After fading to $3.133(narrowing the weekly continuation gap that extends down to $2.968), November rallied to test well – defined resistance at the top of a trading range that has confined it since mid – August. Although volume was nothing to write home about the prompt overcame resistance presented by its 50 – day SMA, then multiple weekly and daily highs, discussed during the week, and the trend line declining from the continuation March and June highs.

Most of us in the natural gas trading universe thought there were buy orders above that declining resistance. Once through it November spiked all the way to the 40 – week SMA. Wednesday’s close was $3.476, the value of the 200 – day SMA $3.483. There was also a gap between $3.475 and $3.494 and November closed that gap and then some…but could not close above the 200 – day. Instead, a high volume reversal day…with the highest volume since May 20th (an upside reversal day from a higher low that carried through until the June Q2 high).

Weekly Continuous

The expiration process went off as expected staying with in the range that was developed during month. A week ago, the premium awarded to November increased from $.266 to $.302. This week that premium rose to $.371. Nov is always premium over Oct, but a year ago when October went to settlement November was awarded $.160, in ’23$ .135. In both ’23 and ’24 new prompt November rallied–in ’23 to a 10/09 high before returning from where it came from then trading back through the low of its first day as prompt on 10/23. The expiration gap left on 09/28/23 was narrowed but not closed and that would have to wait for calendar November.

There is no technical explanation for this year’s exceptional premium other than November’s continuing ability to hold/close above the lower boundary of a trading range that limited declines from around Memorial Day until then prompt August broke down before going off the board at $3.081…and then limited rallies including at the calendar August and to date September highs. Sometimes extraordinary premium for the prompt – in – waiting is delivering a message…sometimes it isn’t.

Weekly Continuous

Friday’s close for October was the lowest of its tenure as prompt (nearly identical to its close of 08/27, the day September went to settlement ($2.888 v $2.886). During that same period the Q4 strip has gained a penny (now $3.304 v $3.293) This type of trade suggests that while the sponsorship is not present to kick off a traditional Q4 rally, there is sufficient sponsorship for the construction of a base.

During calendar ’25 only the March contract traded a high during the last five trading days of its tenure (January ’25 did as well). March fell from $4.476 to settle at$3.906 (January from $4.010 to $3.644). A couple of months, notably May and September, rallied during their last trading day, but every contract month this year has traded lower (seven of the eight to a new contract low or to test the previous contract low, during the closing days of their tenures as prompt).