The now expired June contract tumbled 4% yesterday on signs that drillers are pulling more gas out of the ground while the market is still contending with a massive surplus. June futures rolled off the board 9.7 cents lower at $2.493 while the new spot month July contract sank 15.9 cents to settle at $2.666.
Prior to yesterday, output levels had been consistently above 101 BCF/day since May 22. Output yesterday fell to 100.6 BCF/day but is back up this morning to an estimated 101.3 BCF/day.
Today’s storage data is expected to eat into the surplus as estimates fall short of both last year and the 5 yr avg. Refinitiv has lowered its estimate this morning to a build of 78 BCF while Platts is calling for a build of 79 BCF. The injection will compare to last year’s build of 106 BCF and the 5 yr avg build of 104 BCF.
Projections for the week in progress suggest a build in the low 80 BCF range which compares to the 5 yr avg build 103 BCF and last year’s build of 105 BCF. According to Refinitiv, storage levels are on track to end injection season at an 8 yr high of 3.991 TCF.
Maxar predicts June 2024 will be the 5th hottest June since 1950 with a total of 280 CDDs expected. Their 30 day outlook has undergone warm changes across the West, particularly during the first 2 weeks of the month. The heat will then shift more toward the Central and Southern US during the latter part of the month. Their July outlook remains unchanged with above normal readings expected across the East and near normal readings in the West. A total of 385 CDDs is forecast which would rank 12th hottest.
Prices continue to tumble this morning on the likelihood of summer production increases. Temporary production curtailments are expected to return as weather heats up next month. EQT Corp is also expected to bring back a portion of its volume that was shut in back in February.
LNG feedgas demand has risen to a near 12 week high this morning of 13.7 BCF/day. US exports to Mexico also remain elevated, at 7.3 BCF/day. Exports to Mexico have been on the rise as power generators are burning more gas to meet record power demand.
Today’s expiring June 24 natural gas contract closed .070 higher on Tuesday after holding above 200 day moving average support on early weakness ending a two day run of consecutively lower closes
Post-holiday volume was low at 86,031 contracts.
After closing at 2.590 on Tuesday, the June contract is currently down in today’s early trade with the 200 day moving average at 2.450 remaining primary support.
If 2.450 support is broken, the near term trend will turn back down with the 38% retracement of the recent uptrend at 2.375 and the 50% retracement at 2.200 becoming the next downside support areas.
Longer term support is the 40 day moving average currently at 2.095.
If 2.450 support holds, the trend will remain up with last week’s 2.924 high being primary resistance followed by 2.975.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -57.94
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