Natural Gas December March Spread

Overview

The December March NG spread has fallen today to a new contract low.

Pressure on the front end of the NG curve is likely due to several factors. The fall in the NG flat price off the highs this week has pressured the front end of the NG curve. Also some pressure on the forward curve may be coming from the double index fund roll that normally sees selling in the first month and buying of the 3rd month contract. But, with the index roll ending Monday, will some of the front end selling pressure abate? Additionally, the notion of ample gas in storage is likely weighing on the forward curve currently, with yesterday's storage number showing a build greater than forecast.

Technically, though, the December March NG spread is currently testing the lower bollinger band on the daily chart. That band intersects at about 20 cents. The low today for the spread is 18.9 cents. Support is possible at levels seen in last year's December March spread. Those supports come in at 15.3 and then at 10.7-11.2 cents. The current spread's history suggests resistance lying above at 28.6 and then at 31.6-31.9 cents. Momentum for the spread is still negative.

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