November Natural Gas Lost the Pipeline Premium and Broke the 50-Day
November natural gas futures took over as the prompt month Tuesday and immediately started giving back last week’s pipeline rally. Columbia Gas Transmission found the leak behind the West Virginia force majeure and expected repairs over the weekend.
The 1.8 bcf per day disruption forced a sharp squeeze Thursday. It did not stay unresolved long enough to change the supply picture. By the New York afternoon Tuesday, sellers had pushed November natural gas futures through the $3.087 retracement level and under the 50-day moving average at $3.041.
At 17:20 GMT, November natural gas futures are trading $3.038, down $0.068 or -2.19%. The contract traded from $3.028 to $3.156.
Daily November Natural Gas Futures Technical Analysis
November natural gas futures are trading below the 50-day moving average at $3.041 after failing to hold the $3.087 level. The main trend is still up according to the daily swing chart. A trade through $3.395 will signal a resumption of the uptrend. The main trend will change to down if the swing bottom at $2.976 fails to hold.
The short-term range is $2.896 to $3.395. Its 50% to 61.8% retracement zone is $3.146 to $3.087. The market is trading below the zone, turning $3.087 into the first resistance level. The 50-day moving average is also nearby.
The session low at $3.028 is only a low at this point. It does not establish a new bottom or change the swing-chart structure. A trade through $2.976 would be more important because it would change the main trend to down.
The first upside test is $3.087, followed by the 50% level at $3.146. Above there, the market faces retracement levels at $3.216, $3.264, $3.291 and $3.350 before it can challenge the $3.395 high again.
Natural Gas Price Forecast
Every new Natural Gas analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Natural Gas forecastsThe Weather Turned Milder and November Has to Trade It
The latest weather runs turned milder across the Midwest and East Coast, cutting early October heating demand. Cooling demand in the South Central and Southeast keeps fading. November inherited the prompt month with a forecast that is not helping the long side.
Tuesday’s one bounce reached $3.156 and got sold. Anyone who bought near the $3.395 high last week is down more than 35 cents. The sellers had the weather, the repair timeline, and the calendar working together. The buyers did not have a reason to take offers above $3.087.
A possible Super El Niño is sitting over the deferred contracts. A warmer Northern Hemisphere fall and winter would reduce heating demand when storage is already running ahead of normal.
Storage Is Adequate and the EIA Keeps Raising Production
Thursday’s EIA report is expected to show a 55 to 65 bcf injection for the week ended September 25. Last week’s 53 bcf build put working gas at 3,351 bcf. Inventories are down 4.5% from a year earlier and 2.9% above the five-year average.
The EIA projects end-of-October storage near 3,985 bcf, the highest in a decade and 5% above the five-year average. The EIA also raised its 2027 dry natural gas production forecast to 116.0 bcf per day from 115.3 bcf per day. Baker Hughes reported that active natural gas rigs rose by one to 135, a new three-year high.
Lower-48 dry gas production was 110.6 bcf per day Friday, down 0.5% from a year ago according to BNEF. Demand was 69.0 bcf per day, down 7.9% from a year earlier. LNG net flows to U.S. export terminals were 18.5 bcf per day, down 1.6% from the prior week.
Europe Is Tight but China Is Not Bidding
EU gas storage is about 71% full against an 87% five-year seasonal average. Germany is just above 57%. QatarEnergy has extended force majeure on LNG supplies to Italy’s Edison through December. The Strait of Hormuz is still part of the global LNG trade.
China is the offset. September LNG deliveries were forecast near 5.3 million tons, about 8% below a year ago. European gas prices fell toward €71 per megawatt-hour, the lowest in a month. The tightness in Europe is real. It is not pulling enough on the U.S. front month to offset weak domestic demand.
The Edison Electric Institute reported lower-48 electricity output rose 16.1% from a year earlier to 94,427 gigawatt hours in the week ended September 12. The power numbers are the strongest demand figure in the report. They have not been enough.
What to Watch
Thursday’s EIA report is the next number November natural gas futures have to trade. The pipeline repair removed the outage premium. The weather runs turned milder. The contract is sitting under the 50-day at $3.041 after failing to hold the $3.087 retracement level Tuesday afternoon.
The main trend is still up on the daily swing chart. That lasts until $2.976 goes. Sellers pushed the market through the retracement zone and the average on the same session. Buyers reached $3.156 on Tuesday’s bounce and got sold. The rig count at a three-year high and end-of-October storage projected at the highest level in a decade are not giving the long side much room to work with heading into Thursday’s report.
More Information in our Economic Calendar.
