For a second straight day December contract natural gas prices bounced off support around the $3.05 level but were unable to break lower and fill the gap below.
This price action fit nicely with our Daily Morning Text Alert sent out to Trader level subscribers before 7 AM EST which breaks down our sentiment and a key trading level to watch for the day.
The critical word ended up being “maybe,” as though we did test that $3.05 level a number of times today it was able to remain firm. In fact, prices were able to bounce a bit off it into the settle as well, led by later contracts along the natural gas strip.
We see clearly there how weather depressed the front of the natural gas strip there, but a rather supportive EIA data print seemed to prop up later contracts. The EIA announced a natural gas implied flow of -18 bcf for the week ending November 10th, which was just a bit off from our -14 bcf estimate. Yet this 4 bcf bullish miss was still the most bullish miss from our estimates in almost two months (the September 28th data release for the week ending the 22nd was 5 bcf bullish to our estimate).
Bulls point to natural gas stockpiles that are now moving further below the 5-year average.
Bears point to record production levels that sit significantly above year-ago levels (as seen below in today’s Natural Gas Weekly Report from the EIA).
At the end of the day, though, it will be the weather that determines where prices head over the coming weeks or months, and that is what we are watching most closely. Large differences remain between American and European modeling guidance, and long-range forecasts remain quite volatile.