In an EBW Analytics Group report sent to Rigzone by the EBW team on Tuesday, Eli Rubin, an energy analyst at the company, highlighted that natural gas posted the largest single day gain since 2022 on Monday.
The report pointed out that the November natural gas contract closed at $3.397 per million British thermal units (MMBtu) yesterday. This marked a 38.9 cent, or 12.9 percent, increase from Friday’s close, the report outlined.
“Yesterday’s 38.9¢/MMBtu price spike was the largest single-session gain for a NYMEX natural gas front-month contract since the rampant price volatility of 2022,” Rubin said in the report.
“The initial price surge was due to de-risking of severe early-November price weakness, with cooler weather lessening chances of an early-November supply glut,” he added.
“After clearing key technical resistance at $3.22-3.24/MMBtu, however, continued short-covering – catalyzed by cooler weather – led to further gains,” he continued.
In the report, Rubin said supportive weather added 23 billion cubic feet of demand in 24 hours for the last week of October and first week of November. He pointed out, however, that “forecasts are ‘less bearish’ rather than outright supportive”.
“Early-cycle production nominations dropped sharply this morning but will likely be revised higher,” Rubin noted in the report.
“Weekly average LNG demand continues to flirt with all-time highs. Prices could retest the double-top from earlier this month at $3.55-3.58/MMBtu – but shorts pushed to the sidelines during yesterday’s move higher could reenter the market later this week,” he added.
In an EBW report sent to Rigzone by the EBW team on Monday, Rubin, noted that a “bullish weather shift spark[ed]… [a] natural gas revival”.
“After testing as low as $2.893 per MMBtu intraday Friday – and with weekend Henry Hub spot prices falling to $2.66 [per MMBtu] – a cooler weekend weather shift has revived bullish fortunes for the November contract,” Rubin said in that report.
“Further, weekly average LNG was at a record high over the weekend and natural gas production readings slumped in the Permian and Marcellus,” Rubin added.
In an exclusive interview with Rigzone on Tuesday, Art Hogan, Chief Market Strategist at B. Riley Wealth, highlighted a “perfect trifecta of catalysts to move gas prices higher”.
“The big move in natural gas yesterday came on the heels of forecasts for much colder weather and higher heating demand over the next two weeks than previously expected,” Hogan told Rigzone.
“There has also been a decline in output so far this month and near-record flows of gas to liquefied natural gas export plants,” he added.
In another exclusive interview with Rigzone on Tuesday, Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone that natural gas “turned up as forecasts for temperatures turned down”.
“On top of that we are seeing increased tropical weather activity and increasing hopes for a U.S.-China trade deal,” he added.
“In the meantime, LNG export expectations are rising, and add a bit of winter [and] you could see inventories deplete a bit faster than expected,” he continued.
Rubin is an expert in econometrics, statistics, microeconomics, and energy-related public policy, the EBW Analytics Group site states, noting that he is “instrumental in designing the algorithms used in our models, and in assessing the potential discrepancies between theoretical and practical market effects of models and historical results”.
B. Riley Wealth’s website notes that Hogan’s “distinguished financial industry career spans 30+ years, during which he has concentrated on the U.S. equity markets”. The site points out that Hogan has served as a member of the Board of Governors of Boston Stock Exchange, Inc., and a member of the Board of Directors of NASDAQ OMX BX, Inc.
Flynn is described on the PRICE Futures Group website as “one of the world’s leading energy market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets”. Flynn is also a daily contributor to Fox Business Network, the site highlights.
To contact the author, email andreas.exarheas@rigzone.com
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