NATGAS: Natural Gas End of Day Summary: Henry Hub Rises
Henry Hub front month erased earlier losses to trade higher on the day. Forecasts for cold weather across much of the US next week has offset record production.
- US Natgas MAR 25 up 3.2% at 3.36$/mmbtu
- US Natgas APR 25 up 2.7% at 3.35$/mmbtu
- Lower 48 natural gas demand has risen again on the day and back above normal at 101.1bcf/d today, according to Bloomberg. Average Lower 48 temperatures are forecast to fall below normal into next week.
- NOAA 6-14 day forecast shows below normal across most of the US except for the Gulf Coast and Lower Atlantic regions.
- US domestic natural gas production is again near record highs at 107.0bcf/d today, Bloomberg shows, and in line with the average seen over the previous week.
- US LNG export terminal feedgas rebounded to 14.73bcf/d today driven by a recovery in supply to Sabine Pass although still below start of month levels.
- Export flows to Mexico are recovering back to 6.33bcf/d today after a dip lower at the start of this week, according to Bloomberg.
- US natgas storage change surveys (bcf): -170 (Bloomberg), -170 (WSJ), -168 (Reuters). -174 (5-year average)
- Citi has raised its price forecasts for TTF and JKM across Q1 and Q2, Reuters reported.
- LNG stockpiles held by Japanese utilities increased 12.1% in the week to Feb. 2 to 2.41m mt.
- NFE expects to start operations at a second LNG plant in Altamira, Mexico, in H1 2027, BNamericas reported.
- Studies are expected to begin this year for a proposed pipeline to increase Bolivia’s natural gas dispatch capacity, BNamericas said.
- MNI Gas Weekly: https://media.marketnews.com/MNI_Gas_Weekly_Supply_Fears_Support_European_Gas_Surge_81e2511cf4.pdf?utm_source=email&utm_medium=email&utm_campaign=20250205
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EURGBP TECHS: Resistance Remains Intact
- RES 4: 0.8448 High Oct 31 and reversal trigger
- RES 3: 0.8376 High Nov 19 and a bull trigger
- RES 2: 0.8356 High Nov 27
- RES 1: 0.8313/29 50-day EMA / High Dec 27
- PRICE: 0.8303 @ 19:29 GMT Jan 6
- SUP 1: 0.8263/23 Low Dec 31 / 19
- SUP 2: 0.8203 Low Mar 7 2022 and a major support
- SUP 3: 0.8200 Round number support
- SUP 4: 0.8188 1.00 proj of the Oct 31 - Nov 11 - 19 price swing
EURGBP is unchanged and continues to trade closer to its recent highs. Resistance at 0.8313, the 50-day EMA, has recently been pierced. A clear breach of the average would undermine the bear theme and highlight a stronger reversal. A resumption of the primary downtrend would pave the way for a move towards major support at 0.8203, the Mar 7 ‘22 low and the lowest point of a multi-year range.
BONDS: EGBs-GILTS CASH CLOSE: Inflation Uptick Sees Bunds Underperform
Core European yields rose to start the week, with Bunds underperforming Gilts Monday.
- State-level German data in the morning correctly pointed to an upside surprise in the preliminary December national level inflation release in the afternoon.
- Having apparently confirmed the trend seen in solid Spanish and Portuguese data last week, inflation breakevens rose (EUR 5Y5Y swap +2.9bp to the highest since mid-Nov at 2.08%), paring ECB cut pricing. Final Eurozone PMIs for December also saw upward revisions and firmer price pressures.
- Supply concerns also weighed on core FI, with UK, Austrian and German auctions Tuesday alongside an expected Belgian 10Y syndication.
- The German curve bear flattened, with the UK's lightly bear steepening.
- Periphery/semi-core spreads tightened, with OATs slightly outperforming in a partial reversal of late December's sell-off.
- Tuesday's early highlights include inflation data from Switzerland, France, Italy, and the Eurozone.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 3.3bps at 2.194%, 5-Yr is up 3.3bps at 2.263%, 10-Yr is up 2.2bps at 2.447%, and 30-Yr is up 1bps at 2.663%.
- UK: The 2-Yr yield is up 1.1bps at 4.433%, 5-Yr is up 1.6bps at 4.401%, 10-Yr is up 1.7bps at 4.61%, and 30-Yr is up 2.3bps at 5.179%.
- Italian BTP spread down 3.8bps at 112.5bps / French OAT down 5.0bps at 81.1bps
GBPUSD TECHS: Bearish Trend Sequence Remains Intact
- RES 4: 1.2874 High Nov 12
- RES 3: 1.2811 High Dec 6 and key resistance
- RES 2: 1.2698 50-day EMA
- RES 1: 1.2562 20-day EMA
- PRICE: 1.2518 @ 18:29 GMT Jan 6
- SUP 1: 1.2353 Low Jan 2
- SUP 2: 1.2300 Low Apr 22 2024
- SUP 3: 1.2277 2.0% 10-dma envelope
- SUP 4: 1.2266 Low Nov 14 2023
The sharp sell-off in GBPUSD last Thursday confirmed a resumption of the medium-term downtrend. The move lower maintains the bearish price sequence of lower lows and lower highs and note that moving average studies are in a bear-mode position, highlighting a clear downtrend. Monday’s strong gains are - for now - considered corrective. Initial firm resistance is at 1.2562, the 20-day EMA. The bear trigger is 1.2353, the Jan 2 low.
