

Following early session gains, nat gas prices tumbled into the close as the June contract rolled off the board with low volume and expiration related volatility contributing to the decline. Further downward momentum stemmed from reports of an outage at Freeport LNG and expectations for another above normal injection. The June contract expired at $3.204, down 19.4 cents on the day while the July contract fell 18.7 cents to settle at $3.557.

Today’s storage report is expected to show an injection of 99 BCF for the week ended May 23. This compares to last year’s build of 84 BCF and the 5 yr avg build of 98 BCF. If correct, stocks would total 2.474 TCF. Early injection estimates for the week ending May 30 range from 89 BCF to 122 BCF with an average build of 109 BCF. This compares to last year’s build of 94 BCF and the 5 yr avg build of 98 BCF.
Low feedgas demand levels should help storage injections remain above normal over the coming weeks. Projections suggest the 5 yr avg surplus could rise above 150 BCF by mid June.
Seasonal maintenance continues to weigh on LNG feedgas demand with flows trending downward since hitting an early April high of 17.7 BCF/day. Flows so far this month are averaging 15.6 BCF/day. Reports of an unplanned reduction in flows at Freeport yesterday helped push prices lower. The plant is on track to take in more nat gas today, suggesting issues are being resolved. LNG feedgas is expected to remain below April’s high in June with Cheniere planning about 3 weeks of maintenance at Sabine Pass.

Prices continue lower this morning as today’s 6-10 day forecast from Weather Desk trends cooler for the Midwest and East. A cold front is projected to move through the Plains and Midwest early in the period before reaching the East Coast during the back end of the period. The 11-15 day period features above normal temps across the West and NE with near normal readings projected for the Midcon and South.
Technical Analysis

The new front month July 25 natural gas contract was heavily sold on Wednesday during expiration of the June contract losing .187 (5%) to close the day at 3.557.
A huge gap was created on the daily continuation chart between 3.204 where the June contract expired and 3.557 where the July contract closed on Wednesday.
This gap should be closed in upcoming trade. The bottom of the gap at 3.200 is near term support for the July contract followed by 3.090-3.100.
Longer term support is the 2.859 low set in late-April.
10 and 40 day moving average alignment is bearish along with the short term trend following index suggesting lower prices ahead.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 41.43






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