By: Heather Wine, Senior Risk Manager - Energy
Nat gas came under further pressure yesterday following bearish storage data and uncertainty over Middle East turmoil. Low weather demand expectations for the next 2 weeks added further pressure. May NG settled 5.4 cents lower at $2.67.
Prices continue to slide this morning on weak domestic fundamentals, even as constrained shipping through the Strait of Hormuz continues to support a risk premium in global energy markets.
Production is edging higher, estimated at 107 BCF/d this morning while heating demand is down another 1.3 BCF/d at 18.9 BCF/d.
Last week’s storage injection exceeded expectations, coming in at 50 BCF. The South Central region recorded the largest net build of 32 BCF, followed by an 8 BCF increase in the Midwest. The report also included a downward revision of 4 BCF to South Central salt stocks for the week ended Mar 27, reducing that week’s build to 32 BCF. Total gas in storage stands at 1.911 TCF, 89 BCF above last year and 87 BCF higher than the 5 yr avg surplus.
Storage injections are projected to trend higher over the next several weeks, with the 5 yr avg surplus potentially exceeding 175 BCF by late April.
Source: StoneXThe 2 week ceasefire between the US and Iran has eased recent pressure on US LNG demand after flows had been running near capacity to me strong European demand. LNG feedgas is estimated at 18.9 BCF/d this morning and should remain near that level over the next week. Export demand could tick higher If no permanent deal is reached.
The May 26 natural gas contract remains in a very bearish downtrend as it tests the 2025 spot contract low at 2.622 in today’s early trade.
In Thursday’s session, the May contract lost .054 settling at 2.670, a new spot low for 2026.
If the 2025 low at 2.622 is broken as support, 2.500 will become the next downside support followed by the lower-2.400 area.
The lower-2.400 area represents a 2-year trend line which marked the 2025 low at 2.622.
10-day moving average resistance is at 2.820 today followed by the 40-day average at 2.980.
Moving Average Alignment - Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 36.31
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