Category: Weekly Detail

Weekly Continuous

April gas opened at $4.467 and quickly extended the rally to $4.901 (the highest price paid since 12/28/22) but the sponsorship/volume did not develop to support the higher price and prompt gas reversed lower. After setting a higher high before running out of support, the market quickly reversed and sold off in a quick three day fashion. Unfortunately (for bears) it did not reverse through the previous week’s low, and it lacked a significant volume compared to the previous weeks. Though prices clearly reversed — from a technical standpoint — it can’t be considered a weekly reversal– but it does indicate that the recent strength may be weak in the teeth and further jumps in prices will have significant road blocks between $4.50-$4.90 in the coming months.

The market has been trading in ranges for the last couple of months and perhaps the current market is setting up the new and next range $3.75-$4.90.

Weekly Continuous

Mentioned a few weeks ago to respect the run and constant tests above the $4.00– perhaps the market was changing its bias. All of that respect was under the assumption that prices were going to make a strong test of support at $3.16 and possibly below. Those thoughts left the building with the second largest gain this year…second only to the $.634 gain for week ending 01/10. The “outside” day reversal higher (with the most volume since the day before the February high) was followed by an extension of the rally through that February high for only the seventh time in the last twenty years, but the third time in the last four. April traded to the highest price since 12/30/22 and to a new high weekly close $4.399.

Been discussing the expectation and the divergences looking for the seasonal decline (Q1 low) which is clearly unlikely at this pace. You have to count the two plus weeks decline from the January high ($4.369 – $2.990) that just held the December low ($2.975) as the Q1 low the gas market has traded the Q1 low in January several times in history (in ’21 & ’22 the season low was traded during late December. The last time there was an actual January Q1 low was in ’13). Notwithstanding the dramatically increased likelihood that the “winter” low is in place, divergences, non – confirmations by purely mathematical indicators, are evidence of an underlying weak technical market structure. That which does not mean the market can’t move higher and eventually “cure” those divergences. While not foreclosing that possibility…it is my experience that cure is exceptionally rare without a significant correction in terms of price and time (a correction that lasts two weeks does not meet my expectations.

Weekly Continuation

The historical consistency of declines following rallies to calendar February highs were discussed over the last week particularly 2014 and 2021 (other years described briefly were ’03, ’05 and ’08) that I did not go into. While there were notable similarities between all but ’08, there were also some substantial differences in the degree of weakness that followed. The two most recent examples are illustrative.

In 2014, March gas traded and reversed from its high on 02/24 (similar to March ’25), but the percentage decline to settlement was a little more than twice that of the recent decline. From the February high at $6.493 prompt gas fell to its “Q1” low on 04/02 at $4.221. An erratic Q2 rally peaked on 06/16 at $4.886, significantly below the average of Q2 rallies. Interrupted by several rallies which all peaked at lower highs prompt gas did not print the 2014 low until the last trading day of the year at $2.882.

Weekly Continuous

On Tuesday the market further expanded recent range reversal, after a gap lower opening when trading resumed for the holiday shortened week, and Wednesday’s upside follow through took March to test the zone of resistance between the December and January highs ($4.201 – $4.367). My idea was that a test of that resistance would be an “unlikely event”– I was wrong.

On Wednesday prompt gas posted a new high daily close, $4.280 v $4.258 on 01/16…the highest daily close since 12/30/22 (just before then prompt February ’23 gapped lower to begin the New Year). March extended the rally as high as an after market, Globex trade to $4.476 closing a long – standing gap on the monthly charts left at the beginning of ’23, before a reversal lower. The week’s ending close after another daily gain, $4.243…notably within the resistance previously described, was the highest in twenty – six months.

Weekly Continuous

After breaking through the support trend line from the October and December lows (discussed last week from the support standpoint) on Monday the soon to expire prompt left a small gap to the downside when trading resumed. February managed to close that gap but could rally no further and (as mentioned) the trend line could not hold. With volume increasing, the continuation trend line…which had guided successive prompts higher since the October low, was violated on a daily (weekly also) closing basis and becomes resistance in the future.

Since prompt December traded to $3.563 in mid – November with a weekly volume of 3,830,545 contracts– higher highs have been traded with less volume, this behavior is considered reliable volume divergence. The week of the last of the higher highs, 3,426,087 contracts changed hands…and interestingly traded on the anniversary of the high close during January ’24. In addition to the volume divergence, the weekly RSI had failed to confirm either of the last three weekly closing higher highs.

Daily Continuation

Weekly Continuous

The most interesting near term technical factor is the trend line rising from the continuation October low (see Daily chart above). Similar trend lines rising from the December lows of February and March gas (See March gas below) were tested during the past week. Each time their recovery from the rising support attracted less volume.

Going into expiration period over the next three days. Expect the trend line to continue to guide prompt gas higher toward resistance defined by the zone between the December and January highs. Should the trend line (support) violation break — it likely to announce the beginning of the decline toward a late Q1/early Q2 seasonal low. Expect significant moderation of price as we progress through Q1. The average decline from Q4/Q1 highs to late Q1/early Q2 lows is a little more than 40% for successive prompt months, less for deferred months. There is likely to be a substantial “expiration” gap after February expires. That gap will provide the market important resistance to an extension of any rally in March gas.

Weekly Continuous

Prompt with a gap and strength but did not remain above the December high for very long and ended the week at $3.916 with trading volume substantially less than on 12/30 (685,311 v 998,839), which creates another volume divergence. Not give up it performed another try on Thursday, leaving the prompt at the highest close ($4.258) since the last trading day of 2022 but again volume significantly lagged that traded at the December high and February fell to finish the week lower without testing Monday’s gap higher. While prompt gas continues to work higher the lower weekly close was the third in the last four weeks.

Prompt February was the only monthly contract to finish the week with a loss. Prompt in waiting March gained $.081, reducing February’s premium to $.469 from last week’s peak of $.591. A year ago when February went off the board at $2.490 March ’24 was $2.054 and was never able to make up much of that discount. Trading the high of its tenure on 02/01 at $2.168 before falling to $1.502. Will see if history is going to rhyme.

Weekly Continuous

A significant technical factor was Friday’s higher daily close, which leaves the daily closing trend intact. The trend of a series of higher lows…and now a higher high since prompt November closed at $2.258 on October 17th. This week’s close at $3.989 validates last week’s higher low at $3.354 and suggests trend continuation. The higher weekly close (see Chart above)…the highest since the beginning of 2023 (and above the 2016 weekly closing high) tends to confirm the breakout from a lengthy flat base. There is little definable weekly closing resistance other than a low close in February ’22.

At the low daily close in October the daily ATR (a measure of volatility that is essentially the average range of the last fifteen days), was $.119 and has more than tripled since then to $.359. Comparatively, during the rally from the April low to the June Q2 high the daily ATR increased from $.091 to $.205. Following the January ’24 high the peak was $.312 (the peak of the ATR usually lags the price high). The highest calculation of the last several years was $.769 in June ’22.

Weekly Continuous

During the week ending 12/20 January broke out after a volatile consolidation period that followed the November high test of the upper boundary of a trading range that had confined successive prompts for nearly two years. The prompt closed at $3.748, the highest price since week ending 01/03/23. Price was higher but volume wasn’t (that sends a red flag to some technical analysts) to cast a skeptical eye. Over the entire 34 years history of natural gas trading there had never been an “inside” December (where for the entire month of December prompt gas remained between the price extremes traded during calendar November) and needless to say, there still has not been.

During week ending 12/27 January extended its price spike to $4.01 (the first trade to/through $4 since 01/09/23) before fading to go off the board at $3.644 (the highest monthly settlement since January ’23 at $4.709). February wasted little time before extending the rally to $4.201 with nearly a million shares changing hands on its first day as prompt but did not end the day (12/30) with a higher daily close than 12/24 another in a series of momentum divergences (a higher high (daily and weekly) without a higher close.