ENERGY PRICES WERE STRONG AT THE END OF LAST WEEK… crude oil futures in New York and London finished at the highest levels since that curious spike on the Friday following the U.S. Thanksgiving holiday at the end of November. Meanwhile, speaking of curious, NYMEX Henry Hub gas futures finished at a five-week high.
Henry Hub Natural Gas Weekly Trend… BEARISH.
Here at The Schork Report , we found last week’s move in the moment following Thursday’s EIA release was utterly confounding. To recap, the underground storage report of gas in the U.S. as of March 13th was within 16 percent or 4 Bcf of the average and median forecasts of 20 industry analysts polled in a survey by Bloomberg. The report was 30 percent or 14 Bcf below the seasonal norm and 65 percent or 55 Bcf below the delivery from a year ago. Consequently, the year-on-year surplus ballooned from 283 Bcf (+20%) to 338 Bcf (+26%).
The report was hardly bullish. Be that as it may, in the three minutes following the 10:30 am release, spot NYMEX Henry Hub futures spiked 19 percent or 69.6 cents.
Got that? 69.6 cents in three minutes… or ?$0.004 per second. That is a move, absent of a headline, which obviously defies logic. Regardless, illogical or not, the move has generated a significant amount of short covering.
Yet, we remain unconvinced and we will maintain our Bearish weekly bias.
As we look ahead to this Thursday’s report, the typical delivery is around 38 Bcf. Last year the EIA reported a 37 Bcf delivery for the corresponding week (21-Mar-08). Nationwide implied weather demand last week was generally bearish. For instance, degree days in Chicago were one third below the prior week and one fourth below normal. In New York City degree days were slightly higher, 4.7%, week-on-week, but one eighth below normal.
In other words, we are not going to see a bullish report this week. But, then again, we did not see a bullish report last week… and a lot of good that did us bears. As far as this week goes, The Schork Report projects bids through last week’s 4.424 high print to follow through momentum towards our 4.532 weekly inflection-point. We will look for further strength above here towards our 4.931 intra-week. On the other hand, offers through last week’s 4.048 pivot-low clear a path towards our 3.922 inflection-point.
Below here we will look for corrective offers towards our 3.523 intra-week limit.
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Stephen Schork is the Editor of, "The Schork Report" and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.