

Spot month gas prices rallied about 6% Monday amid an improving demand outlook stemming from stronger power burn and a near full restart at Freeport LNG. The June contract settled 12.9 cents higher at $2.381. Gas prices are now up 40% over the past 2 weeks as specs flipped from net short to net long for the first time since mid January.

Production levels have fallen to 99.1 BCF/day today after hovering right around 100 BCF/day over the past 3 days. Output is expected to average 99.5 BCF/day over the next 2 weeks.
According to the EIA, nat gas output is expected to average 99.2 BCF/day in June, down 330 MMcf/day from May’s projected average.
Flows to Freeport have returned to almost full capacity, lingering near 2 BCF/day late last week into this week. This is up from late April levels that were less than 50 MMcf/day. LNG feedgas estimates for today are coming in at 12.4 BCF/day, down 0.6 BCF day over day. Feedgas flows this month are averaging 12.6 BCF/day, down 0.4 BCF/day from May 2023.
European gas storage is about 64% full which should help ease competition for LNG over the coming months.

The substantial market oversupply is adding pressure to the market this morning. Platts is calling for a build of 66 BCF for the week ended May 10 which would help narrow the 30% surplus. The number will compare to last year’s build of 93 BCF and the 5 yr avg build of 90 BCF.
On the flipside, total demand is up 2.5 BCF/day this morning due to a 1.2 BCF/day increase in power burn and a 1.6 BCF/day increase res/comm usage.

A strong rally on Monday by the June 24 natural gas contract as buyers came in on early weakness to move the contract up to a 2.384 daily high before closing the session at 2.381. For the day, the contract was up .129 or 5.7%.
Volume was neutral at 164,690 contracts.
The open gap created in late-January on the daily continuation chart at 2.411 was nearly closed on Monday.
If buying continues, the 200 day moving average currently at 2.455 will become the next upside objective.
Bearish divergences continue to form on the 60-minute chart with lower highs being set on the trend following oscillators as new price highs are set. This may be a warning that an impending correction back down is near.
10 day moving average support is at 2.200 today with longer term support at 2.090-2.100 followed by the 40 day moving average at 1.870.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -68.23






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