Aug futures have been on the decline since becoming prompt month last week. The contract fell 5% yesterday, breaking through key support as the ongoing supply surplus overshadowed expectations for record cooling degree days over the next 2 weeks. Extreme heat will be prevalent across the West while cooler conditions are expected across parts of the northern and central US during the 6-10 day period. Aug nat gas settled Monday at $2.478, down 12.3 cents.
Another smaller than normal injection is expected in this week’s storage report which will be released on Wednesday, July 3 at 11am CT. Given last week’s heat and strong gas fired power demand, Platts is calling for a build of just 34 BCF for the week ended June 28. A build this size would be more than 50% below the 5 yr avg build of 69 BCF and would fall well below last year’s build of 76 BCF. The supply/demand balance last week tightened by about 1.4 BCF/day.
For the week in progress, early estimates suggest a build of 58 BCF which would be more in line with historical comparisons.
Demand is expected to average 6.8 BCF higher this month compared to June with gas fired power demand being the primary driver of the increase. Platts projects demand will average 97.6 BCF/day this month, which would be 11% higher than the 5 yr avg while gas fired power demand is expected to average 46.8 BCF/day. Cooling demand in the NE will see the largest increase out of all the regions, averaging 12.4 BCF/day this month.
Prices continue to ease this morning on lower feedgas demand. The market is also reacting to the blockage of Biden’s pause on approving new gas export facilities by the federal court yesterday. The pause had no effect on LNG projects already approved or under construction. The ruling means that the DOE will resume its consideration of permit applications for new LNG export projects.
Hurricane Beryl strengthened late Monday into the earliest category 5 Atlantic hurricane on record after devastating the Windward Islands. Beryl is expected to weaken slightly today but will remain strong as it moves into the central Caribbean and passes near Jamaica on Wed.
The August 24 natural gas contract broke under a key area of support on Monday keeping the market in a near term bearish downtrend.
The support that was broken at the lower-2.500 area was a trend line beginning at the contract low on the August 24 daily chart. It was also the 38% retracement support of the 2024 uptrend on the daily continuation chart.
The next areas of support to watch as the 200 day moving average on the daily continuation chart at 2.465 with longer term support at 2.320, the 50% retracement of the 2024 uptrend.
2.510-2.520 is the first area of resistance today followed by the 40 day moving average currently at 2.635.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 41.80
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