

Spot month gas prices rose about 5% Monday as warmer weather forecasts are seen boosting demand while limiting storage injections later this month. In the meantime, this week’s storage report is expected to show the 8th straight triple digit build. July futures settled 16.7 cents higher at $3.748.

A major weather pattern change is expected to take hold this weekend into next week with temps heating up across the Midwest and East while cooling down across the West. CDDs are projected to rank 2nd hottest at for the period with temps projected to top out in the mid to upper 90s from Chicago to NYC while readings across parts of the Mid-Atlantic will rise into the low 100s.
With hotter temps on the way, gas demand is expected to rise above the current level of 99.6 BCF. The 7 day average is projected at 102.6 BCF/day with the 8-14 day average at 105 BCF/day. The majority of the increase stems from power burn which is expected to rise 3.4 BCF/day over the next week to 44.6 BCF/day and to 46.9 BCF/day during the 8-14 day period.
Production levels are trending higher, coming in this morning at 105.5 BCF/day. Stronger output, combined with recent, limited demand levels is supporting injection estimates.

Prices continued to trade higher this morning as temps heat up, fueling a surge in demand over the next 2 weeks.
Technical Analysis

The July 25 natural gas contract gapped over 10 day moving average resistance on Monday to begin the new week of trade turning the trend back higher following weakness last week.
After bottoming last Tuesday at a 3.453 low, prices have trended back higher closing Monday at 3.748, up .167 (4.67%).
Continued buying today has rallied the July contract above 3.817 resistance set two weeks ago. This turns the 3.840 May high into the next area of resistance (3.840 current overnight high).
A breakout above 3.840 resistance will turn 4.000 and 4.090-4.100 into the next areas of resistance.
The 10 day moving average broken as resistance on Monday is now near term support at 3.645. Longer term support is last week’s 3.453 low which coincides with the 40 day moving average at 3.460.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 58.53






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