

The early week rally stalled yesterday as the market searched for direction. Nat gas maintained the previous 2 session’s worth of gains as expectations for a growing surplus and weak LNG feedgas demand kept upside limited. July futures settled 0.6 cent higher at $3.716.

Today’s storage report is expected to show a 6th straight triple digit build that will further expand the 5 yr avg surplus. Stocks are expected to rise 111 BCF in the week ended May 30, which compares to last year’s build of 94 BCF and the 5 yr avg build of 98 BCF. If correct, stocks would rise to 2.587 TCF.
Early estimates for the week in progress suggest a build of 105 BCF which would continue the above normal injection pace.
LNG feedgas demand came in at 13.4 BCF/day yesterday as maintenance continues at Sabine Pass. Flows to Sabine Pass are at near 2 yr lows of about 3 BCF/day, which is down from May’s average of 4.5 BCF/day. Intake at Corpus Christi held at 2 week lows yesterday of 1.5 BCF/day. Maintenance at Sabine Pass will continue through June 22.
Weather related demand remains subdued given the delayed arrival of summer heat across the Midwest. We should begin to see cooling demand rise come mid-June.

Prices are trading near flat in anticipation of storage data. Production has ticked higher by 0.3 BCF/day to 104.2 BCF/day.
Technical Analysis

The July 25 natural gas contract closed flat for a 2nd day on Wednesday losing 6 ticks to settle at 3.716.
There has been zero follow through selling over the past two sessions following Monday’s .250 gain as the July contract continues to hold under July chart 40 day moving average resistance at the lower-3.700 area.
A breakout above Tuesday’s 3.764 high will turn the May 3.840 high into the next area of resistance.
The bottom of the gap created on Monday’s open at 3.450 is near term support followed by 3.200 which is the bottom of the gap created on the daily continuation 60-minute chart during expiration of the June 25 contract. These gaps will remain bearish technical indicators until closed.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 57.40






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