Natural gas prices experienced pressure from below, ultimately settling at 133.6, down -1.11% from the previous week’s close to record output and a lower-than-anticipated storage withdrawal.
Warmer-than-normal weather that reduced demand for heating caused US utilities to withdraw 49 billion cubic feet of natural gas from the storage during the week closing February 9, 2024, decreasing short of market projections for a 67 bcf draw.
This is in contrast to a five-year average drop of 119 bcf for this time of year and a more significant drop of 117 bcf during the same week the previous year.
Stockpiles were reduced to 2.535 trillion cubic feet (tcf) as a result of the storage withdrawal. Which was 348 bcf above the five-year average and 255 bcf higher than the previous year.
According to a financial company called LSEG. Gas output in the US Lower 48 states increased to an average of 105.8 billion cubic feet per day (bcfd) in February from 102.1 bcfd in January.
Despite this increase, gas output was still below the monthly record high of 106.3 bcfd in December. Despite these factors, through March 1st, most of the Lower 48 states should see warmer-than-normal weather. However, next week should see a slight cool-down.
Technically, the market showed indications of long liquidation, as open interest dropped 2.9% to settle at 72,267 contracts. The current support level for natural gas prices is 130.2, with 126.8 serving as a possible downside test. Resistance is expected at 138.4, and a breakout there could take the price to levels around 143.2 on the upside.