Spot month gas prices rose more than 4% during Tuesday’s trade as forecasts suggested more record breaking heat on the horizon, particularly across the East Coast. July futures settled 12.1 cents higher at $2.909.
Record breaking heat across the West and Central US through mid June is resulting in bullish storage expectations for this week’s storage report, which will be released a day later than normal. Platts is currently projecting a build of 72 BCF for the week ended Jun 14 while Refinitiv calls for a build of 69 BCF. A build this size would undershoot last year’s build by 20 BCF and the 5 yr avg build by 11 BCF.
The surplus is expected to continue narrowing over the next couple of weeks. For the week in progress, stocks are expected build by about 68 BCF which compares to the 5 yr avg build of 85 BCF and last year’s build of 81 BCF.
Producers are slowly increasing output amid a spike in gas fired power demand. Heat in the NE is expected to push gas fired power demand to new record highs for mid to late June. NE power burn is expected to average just over 12 BCF/day for the next 10 days, hitting highs of about 12.4 BCF/day.
After falling to 99.8 BCF/day on Tuesday, output this morning is coming in at 100.1 BCF/day. Production is still running below June 2023 levels by 2.4 BCF/day.
The prompt month NG contract has pulled back into the low $2.80 range this morning as forecasts have turned a drop cooler while activity picks up in the tropics. The first named storm of the season, Tropical Storm Alberto, has made landfall in Mexico early this morning and is producing flooding along the southern TX coast. Another disturbance in the SW Gulf of Mexico has a 20% chance of development over the weekend.
Another round of extreme heat is expected across the Mid-Atlantic this weekend with highs in the mid 90s to low 100s. The 6-10 day outlook for the Midwest to East however trends cooler this morning with temps now expected to fall back to normal to slightly below normal levels while the South trends hotter for the coming 6-10 day period. Over the next 15 days, the ERCOT region is expected to yield 297 CDDs, which ranks just outside of the top 10 hottest.
The July 24 natural gas contract reversed course back higher following Monday’s steep sell off recovering all of the losses on Tuesday and in Wednesday’s combined-holiday sessions.
However, the daily settlement on Wednesday at 2.909 held under 10 day moving average resistance on the daily continuation chart and trend line resistance broken Monday on the 60-minute chart beginning at the late-May low.
With resistance holding, the near term trend at this point remains down with Monday’s 2.759 low being the first area of support.
Longer term support is at the 40 day moving average currently at 2.485 followed closely by the 200 day average at 2.465. 10, 40 and 200 day moving average alignment is now bullish.
10 day moving average resistance is at 2.920 today followed by 60 minute chart trend line resistance near 2.980. A close above both with turn last week’s 3.159 high into the next area of resistance.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -56.10
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