Natural Gas Corner - Market Review - Rallies Continue To Be Well Sold

An early rally on Monday had the March 15 natural gas contract higher by nearly 20% from the 2-year low set two weeks ago topping out just above the $3.000/MMBtu level in morning trade.

But as has been the case in the natural gas market since last topping in November, the rally was sold back lower by the close erasing roughly half of last week’s gains.

 The technical picture for the market has been improving but the spot contract has not been able to decisively move above key resistance at the lower-3.000 level.  Key technical support for the March contract is at the 2.800 level.

Weather-related demand for natural gas has been very high over the past 10 days with the next two EIA weekly storage draws expected to average 200+ Bcf. 

 Storage, however, remains high slightly above the 5-year average for a similar time frame and nearly 50% above last year’s level.  Storage at the end of March will likely fall in the 1,500-1,600 Bcf range, near the 10-year average of 1,565 Bcf.

The key test for the market will be price action once winter heating demand eases in upcoming weeks.