Chart of the day – NATGAS (12/31/2024)

Natural gas futures are seeing increased volatility as weather forecasts point to a significant shift toward colder temperatures, leading to substantial price movements amid supply concerns and shifting trading positions. After an impressive rally yesterday, the price is slightly down today.

Key Market Statistics:

Current price: $3.82 (-3%)
Session high: $4.201 (52-week high)
Previous session: +15%
Performance since the start of the year: +58%

Weather dynamics

Updated forecasts from The Weather Co. and Atmospheric G2 call for below-average temperatures across the eastern United States, from Florida to Maine, in January. The peak of the cold snap is forecast for mid-month, with AccuWeather warning of potential “substantial snow and ice” conditions. This is a significant departure from the relatively mild fall and early winter.

Meteorologists predict significant cooling across the East Coast with a probability of nearly 95%. These below normal temperatures are expected to persist until at least mid-February. Source : Bloomberg Financial LP

Supply and production risks

Industry analysts, including Again Capital’s John Kilduff, warn of “freeze” risks that could disrupt natural gas production flows, particularly in the Marcellus Shale region. This threat comes as storage levels have normalized to just 5% above the five-year average, a significant decline from the 40% surplus seen last winter.

Trade and Market Sentiment

Algorithmic trading funds moved from flat to net long positions, reflecting growing bullish sentiment. The February contract’s recent surge marked its biggest daily gain since its inception in 2012, highlighting the market’s sensitivity to weather-related demand expectations.

LNG export prospects

Additional pressure on demand comes from expanding LNG export capacity, with Cheniere Energy’s facilities in Corpus Christi and Venture Global in Plaquemines ramping up. This comes as global LNG exports saw their weakest growth since 2015, which could support prices amid tight market conditions.

NATGAS (Intervalle D1)

The commodity price is currently trading above the 61.8% Fibonacci retracement level. The RSI is cooling after approaching overbought levels, a pattern that has historically preceded potential bullish moves. The MACD indicates a strong bullish divergence, reinforcing the possibility of continued bullish momentum.

The 30-day EMA is positioned above the 23.6% Fibonacci retracement level, providing a very strong support zone for the bulls. For bears, this level could serve as an important target, signaling a potential shift if breached. Source: xStation

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