

Nat gas has continued its climb higher with a miss in storage expectations accelerating gains. Forecasts for possible record heat over the next 5 days and the return of Sabine Pass LNG to full capacity next week is adding further strength. Energy supply concerns due to conflict in the Middle East are also being priced in. July futures ended Wednesday’s session 13.8 cents higher at $3.989.

The demand outlook for the next 2 weeks remains bullish with cities across the Eastern US experiencing temps well above normal. The Midwest, NE and Midcon regions are all expecting to see readings about 10 degrees warmer than normal with some areas surpassing record highs. Power burn is expected to soar about 10% over the next 10 days relative to the previous 10 days. Power burn is estimated at 42.7 BCF/day this morning and is projected to average 46.4 BCF/day over the next 2 weeks.
Storage data proved supportive with stocks rising by a lower than expected 95 BCF for the week ended June 13. The build also marked the first in 8 weeks to fall short of 100 BCF. Total gas in storage stands at 2.802 TCF, 233 BCF below last year and 162 BCF above the 5 yr avg. With temps heating up, next week’s storage report is expected to show a smaller build of 80 BCF which would be in line with the 5 yr avg build of 79 BCF and higher than last year’s build of 59 BCF.

Conflict in the Middle East is rattling energy markets with ongoing uncertainty over the Iran-Israel conflict driving a broad rally across the energy complex. Iran’s largest gas field has suffered damage while broader concerns have mounted over potential supply disruptions through the critical Strait of Hormuz.
Prices surpassed $4 overnight, hitting a high of $4.148. The market has since fallen back under the $4 level and is currently 3 cents lower on the day.
Technical Analysis

The July 25 natural gas contract has been heavily bid during this holiday-shortened week of trade after breaking out above 10 day moving average resistance in Monday’s early trade.
The July contract closed Wednesday’s session at 3.989 and is up another .120 in today’s early trade as it tests 4.120 resistance.
4.120 is the 61.8% retracement of the March-April downtrend. If broken, the 78% retracement at 4.450 will become the next upside objective.
4.000 is near term support followed by the 10 day moving average currently at 3.725.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 67.20






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