Looking to the Futures

Natural gas prices have been on a downward trend due to higher temperatures in the northern hemisphere but closed higher in Tuesday’s trading. February natural gas, /NGG25, settled at 3.08 per 10,000 MMBtu, up 0.052 from previous the settlement. 
 

Across the lower 48, temperatures have been higher than normal. The NOAA anticipates temperatures to be above average for December, January, and February for the majority of the US, but below normal for the Pacific Northwest. Higher temperatures are bearish for natural gas as there would be a lesser anticipated need to heat homes. 
 

The US is currently in a El Niño pattern, with an expectation to change to La Niña in the next few months, according to NOAA. This event would lower temperatures in the US and bring about greater precipitation bringing about better mountain conditions for skiing. 
NOAA will be releasing a new outlook on December 19th. 
 

The Department of Energy (DOE) released an anticipated reported which was commissioned after President Biden announced a pause in approving new natural gas export terminals. The report detailed the economic and environmental impacts of increasing natural gas exports. 
 

The DOE took what many would call a “left” leaning bias with many climate activists applauding the report. The reported referenced the current energy prices would increase domestically by $100 a year. Energy Secretary Jennifer Granholm said, “Middle and low-income households already face energy bills that are too high.”
 

Opponents to the report were called it politically motivated and many in the oil and gas industry indicated they would not accept the findings before its release. 
 

Mike Sommers, President of American Petroleum Institute stated, “After nearly a year of a politically motivated pause that has only weakened global energy security, it’s never been clearer that U.S. LNG is critical for meeting growing demand for affordable, reliable energy while supporting our allies overseas.”
 

President-elect Trump has publicly stated he would “drill-baby-drill” to maintain the US dominance in the oil and gas industry. He nominated Chris Wright to be the next energy secretary who is in favor of increasing gas exports. 
 

Traders will be looking to Thursday for an update in gas inventories. Last week the EIA report came in as bullish for natural gas, falling 190 bcf.

February natural gas, /NGG25, settled at 3.08 per 10,000 MMBtu, up 0.052 from previous settlement.
 

/NGG25 contract is trading in a bearish trend to its 50- and 200-day simple moving averages. The February contract settled above the 50-day SMA which may signal a bullish reversal, but the 200-day SMA may appear to be a resistance area based on the historical chart information. The 50-day SMA (white) is at 3.062 and the 200-day SMA (yellow) is at 3.407.
 

The 14-day RSI is at 50.399% and trending up. This indicates a possible bullish trend that may be forming in line with the crossing of the 50-day SMA. 
 

The Directional Movement Index indicates a weak bullish trend. The ADX (white) is low and flat indicating a weak trend. The positive DI (green) is elevated and above the negative DI (red). This indicates a clear bullish trend but may not hold up to a strong bearish move.

Building Permits 8:30 AM ET
 

Current Account Balance 8:30 AM ET
 

EIA Crude Oil Inventories 10:30 AM ET
 

FOMC Rate Decision 2:00 PM ET
 

Housing Starts 8:30 AM ET
 

MBA Mortgage Applications Index 7:00 AM ET