US NATGAS: Henry Hub Falls to Partially Reverse Gains Yesterday
Henry Hub is reversing some of the gain seen yesterday ahead of the March 25 contract expiry today with lower demand offsetting support from ongoing strong LNG export demand.
- Lower 48 natural gas demand is down below five year seasonal average levels at 83.2bcf/d as temperatures have recovered from the cold last week. The current forecast shows temperatures drifting back below normal over the coming weekend before a recovery to drift either side of normal through the second week of the outlook.
- US domestic natural gas production continues to recover up to 106.56bcf/d today following the drop last week but remains below the highs of over 108bcf/d early in Feb.
- US LNG export terminal feedgas is steady at 15.62bcf/d today compared to an average of 15.51bcf/d over the previous week.
- Export flows to Mexico are estimated down from levels seen last week to 6.27bcf/d today, according to Bloomberg.
- Nymex Henry Hub daily aggregate traded futures volumes was at 635k on Feb. 25.
- US Natgas MAR 25 down 1.7% at 4.11$/mmbtu
- US Natgas APR 25 down 1.2% at 4.08$/mmbtu
- US Natgas FEB 26 down 0.8% at 4.76$/mmbtu
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EQUITIES: DeepSeek Sell-Off Cemented, Linked Stocks Sit Sharply Lower Pre-Market
Pre-market weakness in both direct and indirectly linked AI names sticks into the cash open - as DeepSeek's success undermines the AI-driven US equity rally.
Pre-market, e-mini S&P off by 2.3%, NASDAQ futs off 3.9%:
- Nvidia shares lower by 11.3%(earnings Feb 26th)
- Meta Platforms lower by 3.8% (earnings on Wednesday)
- Microsoft lower by 6.0% (earnings on Wednesday)
- Tesla lower by 4.3% (earnings on Wednesday)
That primes markets to shed over $700bln in market cap at the open across those four stocks alone. Why is Deepseek different? Deepseek's open-source, free-to-play approach twinned with highly regarded efficiency and accuracy undermines not only the revenue-generating capacity of models produced by OpenAI, Alphabet, Meta and others - but also the significant levels of investment in AI from US firms over the past five years. It also shows the ability of Chinese firms to skirt chip sanctions targeted at limiting their AI capacity.
More here: https://www.mnimarkets.com/articles/deepseek-why-is-this-app-undermining-markets-1737968390827
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jan28 $1.0400(E1.0bln), $1.0500(E1.2bln)
- USD/JPY: Jan29 Y155.00($1.2bln)
- AUD/USD: Jan28 $0.6300(A$1.5bln)
- USD/CAD: Jan29 C$1.4500($1.1bln)
OUTLOOK: Price Signal Summary - Short-Term Bull Cycle In Gilts Remains Intact
- In the FI space, the pullback from recent highs in Bund futures appears corrective and a short-term bull cycle is in play for now. The Jan 15 rally highlighted a reversal signal - a bullish engulfing candle. It continues to suggest scope for a corrective phase that is allowing an oversold trend condition to unwind. Sights are on 132.15, the 20-day EMA. A clear breach of the average would strengthen the bullish theme. The bear trigger is at 130.28, the Jan 15 low. Initial support lies at 131.00, the Jan 16 / 24 low.
- The medium-term trend condition in Gilt futures remains bearish. However, recent gains continue to highlight a corrective phase and signal scope for a continuation higher near-term. The focus is on 92.75, the 50.0% retracement of the Dec 3 - Jan 13 bear leg. Initial support is at 91.10, the Jan 20 low.
