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Daily Natural Gas Market Update 7-16-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20240716070445-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20240716070506-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Gas prices tanked yesterday by about 7% after it became evident that Freeport would remain operating below full capacity with a gradual resumption of exports anticipated as damage is repaired. Forecasts for less heat and declining demand later this week across the central and eastern US added further pressure.  Spot month futures settled 17.1 cents lower at $2.158.

 

image 97476
Source: Bloomberg, CME

Freeport said Monday that it would restart one of its 3 liquefaction trains this week as power had been restored to the region with the other 2 trains restarting shortly thereafter.  Production levels following the restart will likely be at reduced rates for some time as repairs continue to be made. Feedgas deliveries to Freeport remained minimal on Monday with Freeport on track to pull in 0.4 BCF/day today. 

 

image 97477
Source: NOAA

 

Dry output is coming in 1.5 BCF lower this morning at 100.1 BCF/day.  This is being offset by a drop of 1.4 BCF in total demand.  The drop is demand is a result of power burn falling 1.1 BCF/day and LNG feedgas demand dropping 0.4 BCF/day to 10.8 BCF/day

 

​​image 97478
Source: NOAA

The market is trading higher this morning as the market prices in strong weather related demand.  Yesterday ranked as the 8th hottest day on record with 15.81 CDDs nationally.  Heat is expected to continue through tomorrow before a cold front pushes through.

 

Technical Analysis 
 
image-20240716070633-3
Source: Bloomberg, CME

The August 24 natural gas contract gapped lower to begin Monday’s session and was heavily sold into the close losing .171 (7.3%) to settle the day at 2.158.

Volume was at a 1-month high of 189,516 contracts.

The 61.8% retracement of the 2024 uptrend at 2.120 is the next area of support under Monday’s 2.147 low.

If 2.120 support is broken, the 78% retracement at 1.850 will become the next area of support.

The top of the gap created on Monday’s open between 2.260-2.310 which coincides with the 10 day moving average at 2.315 is primary resistance today.

Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish

Relative Strength Index - 36.31

image 97481
Source: Bloomberg, CME
image 97479
Source: Bloomberg, CME
image 97480
Source: Bloomberg, CME
image 96675
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 96676
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 97482
Source: Bloomberg, CME
 
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