NATGAS: Goldman Revises Henry Hub Forecasts Higher on Colder Weather
U.S. gas prices face significant upside risk from cold weather this month according to Goldman Sachs analysts.
- January is currently forecast to be 1.3 standard deviations colder than average in the US its analysts said. Along with colder weather, production freeze offs and strong LNG feedgas demand - US January gas balances might be 6.4 Bcf/d tighter than Goldman previously expected.
- It poses upside risk to Goldman’s $2.90/mmBtu Summer 2025 Henry Hub forecast which it has now raised to $3.30/mmBtu.
- Goldman expects US total feedgas into LNG export facilities to average nearly 15 Bcf/d this year (+2.3 Bcf/d yoy), reaching 16.7 Bcf/d by year end as Plaquemine’s and Corpus Christi Stage 3 boost flows.
- “Should the current extended cold forecast for January realize, this would take our end-Oct25 storage expectation to 51 Bcf below our Nov24 estimate, at 4.05 Tcf,” Goldman said.
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GILTS: A Little Firmer, Gilt/Bund Spread Eyed After Fresh Cycle High
Gilts rally a little on the back of the previously covered RTRS source report that flagged the potential for CNY devaluation from the PBoC.
- Futures as high as 95.38 before fading back to 95.30.
- A reminder that Tuesday saw the contract break support at 95.49 and 95.17.
- Initial support now located at yesterday’s low (95.13). Bears ultimately need to break key support at the Nov 18 low (93.40) to reignite downside momentum.
- Yields ~1bp lower across the curve.
- 10+-Year benchmarks hit the highest levels of December yesterday.
- 10s and 50s closed above their 50-DMAs.
- Spread to Bunds 219.5bp after closing pretty much bang on the key 220bp level yesterday, a fresh cycle closing high.
- Fresh extension higher in the spread would target the ’22 mini-Budget high at 227.5bp.
- SONIA futures flat to +1.0.
- GBP4bln of 4.25% Jul-34 gilt supply due this morning, but little else on the UK calendar.
- That will leave focus on cross-market cues and the U.S. CPI data.
FOREX: FX Exchange traded Roll update
FX Exchanged traded Roll (CME) have dominated Yesterday and continue to do so in early trade, some have favoured rolling into the March expiry ahead of this Week's Risk events.
Roll pace (expiry Monday).
- EUR: 37% (within pace).
- GBP: 42% (above pace).
- JPY: 44% (above pace).
- CHF: 39% (above pace).
- CAD: 36% (within pace).
- AUD: 44% (above pace).
- NZD: 37% (above pace).
- SEK: 41% (above pace).
- NOK: 56% (way above pace).
SILVER TECHS: Holding On To Its Recent Gains
- RES 4: $35.226 - 61.8% of the 2011 - 2020 major bear leg
- RES 3: $35.167 - 2.00 proj of the Aug 8 - 26 - Sep 6 price swing
- RES 2: $33.125/34.903 - High Nov 1 / High Oct 23 and the bull trigger
- RES 1: $32.283 - High Dec 9
- PRICE: 31.693 @ 08:15 GMT Dec 11
- SUP 1: $29.642 - Low Nov 28
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
Silver is holding on to its recent gains. Despite a recovery in price, the bear cycle that started Oct 23 remains in play and gains are considered corrective - for now. Price has recently traded through a trendline drawn from the Aug 8 low. A resumption of the bear leg would open $28.446, a Fibonacci retracement. The 50-day EMA, at $31.209, has been pierced. A continuation higher would expose $33.125, the Nov 1 high.
