Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from Thursday’s bullish gas storage report and last Friday’s monthly jobs report. The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish. The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown on the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart8.gif

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Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from Thursday’s bullish gas storage report and today’s monthly jobs report. The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish. The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown in the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart2.gif

Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from today’s expected bearish gas storage report and Friday’s monthly jobs report.  The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish.  The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown on the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart5.gif

Natural Gas Commentary

January natural gas futures prices started its run in the lead position today on an upswing, with weather support and revised outlooks for this week’s storage report helping to build support back under the market following sharp losses for the expired December contract and the fresh front-month ahead of its first day in the lead. Spanning $3.525 to $3.633/MMBtu through the session, the contract settled up $.108 at $3.633/MMBtu, gaining momentum as traders look to colder winter weather, stronger demand and expectations of an upcoming string of pulls from natural gas inventories to drive stocks down from their current historically high levels. Technical support for January natural gas is seen at $3.50, $3.25, $3.00 and $2.75, while resistance is marked near $3.75, $4.00, $4.25, $4.50 and $4.75/MMBtu.

You will note the profound uptick in the near month gas futures price in the chart below as January took the near month position today.

Short-covering ahead of the arrival of colder air to key heat-consuming regions bolstered the market. As temperatures cool, the market expects stronger demand will begin to draw stocks down after a 9-Bcf injection reported in the week to Nov. 18 drove working gas inventories to a record-high 3,852 Bcf. But before the onset of steady storage withdrawals, the market anticipates another smallish build in stocks for the week to Nov. 25, as mild weather is expected to have combined with the Thanksgiving holiday to deflate demand.

While early forecasts called for a storage build of about 10 Bcf when the EIA releases its data at 10:30 a.m. ET on Dec. 1, revisions are taking that number lower as traders assess the likely impact of some chilly weather on storage building. While forecasts run widely from modest draws to a build of up to 20 Bcf, most outlooks now suggest a build of about 8 Bcf, which will compare bearishly to a 29-Bcf five-year-average withdrawal and a 21-Bcf pull reported in the corresponding week last year.

Day-ahead, spot markets were being supported by colder weather as higher demand was expected on regional power grids Nov. 30. Deals at the benchmark Henry Hub in Louisiana were up about $.30 on average in deals indexed near $3.40, while action at Transco Zone 6 NY in the Northeast lifted about $.42 into the $3.70s/MMBtu.

Natural Gas and Crude Oil Outlook Today

The current natural gas market is looking for a reason to move higher as the last trading for December 2011 occurs today.  The natural gas market view and bias is neutral, but watchful of how price activity plays out over the next several trading sessions.  Last week’s short covering rally was largely motivated by a changing (cooler) weather outlook.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish.  The cloud of uncertainty got slightly smaller over the weekend in Europe, but we will have to watch Europe closely as the sentiment could change on one or more negative news snippets at any time.  WTI and Brent crude oil prices are once again back to being in sync with the direction of the U.S. dollar and euro, but are also being driven by the ongoing geopolitical situations in the Middle East.

Natural Gas Commentary

December natural gas futures settled the Monday, Nov. 21, trading session with an $.083 gain at $3.399/MMBtu, supported in bargain hunting and modest short-covering as the contract slipped to post a $3.285/MMBtu session low, a level not seen since October 2010, ahead of options expiration Wednesday and the contract’s expiration the following Monday, Nov. 28.  Technical support for December natural gas is seen at $3.20, $3.00 and $2.75, while resistance is marked near $3.50, $3.75, $4.00, $4.25, $4.50 and $4.75/MMBtu.

The modest weather changes signaling some possible significant improvement in demand added support to the market, while traders are looking ahead to another expected build in natural gas inventories above the already record-high 3,850 Bcf left after the previous week’s 19-Bcf injection.  Early projections for the storage report due out at noon ET Nov. 23, a day earlier than usual due to the Thanksgiving holiday, and covering the week to Nov. 18, range from an injection of 19 Bcf to a build of 28 Bcf, beating the five-year average and year-ago draw, both of which are 7 Bcf.

Trading volumes are expected to thin into the Thanksgiving holiday weekend, though the risk of volatility is higher given the expiration of options and the contract in the next few days.