The market had little reaction to yesterday’s weekly storage data that came in higher than expected. Prices actually traded higher mid morning but quickly fell back down amid neutral weather conditions and continued LNG issues. Today’s expiring May contract settled 1.5 cents lower at $1.64. The June contract settled 0.7 cent higher at $1.986.
Exceeding market expectations by 10 BCF, the EIA reported an injection of 92 BCF for the week ended April 19. The build was also bearish versus historical comparisons, widening the already bulky surplus. Total gas in storage now stands at 2.425 TCF, 655 BCF above the 5 yr avg and 439 BCF above last year. US demand continued to slide last week, falling 4.7 BCF/day. Res/comm usage was down nearly 3 BCF/day while a drop in LNG feedgas and strong wind and solar generation helped plump up last week’s build.
Chillier weather this week across the Midwest and NE has boosted demand this week. As a result, injection estimates for the week in progress suggest a build in the 63-70 BCF range, lower than the 5 yr avg of 72 BCF.
Wind generation is projected to reach yearly highs over the next few days as strong systems track across the US, leaving less dependence on nat gas. Temps will also be comfortable, keeping weather demand limited.
Feedgas deliveries to Freeport fell sharply over the past 2 days after Train 3 experienced its second trip in 2 weeks. Total LNG feedgas is coming in this morning up 0.5 BCF/day at 12.2 BCF/day.
Adding to the downside, Maxar’s 30 day outlook underwent significant warm changes from the Rockies to the East. Widespread above normal temps are projected from the Rockies to the East with the Central US seeing the warmest readings relative to normal. A total of 140 CDDs are expected, the 9th highest, while 110 HDDs are expected, ranking 3rd lowest. Maxar's June forecast points to above normal temps across the Plains, Midwest and South with near normal readings in the West and NE.
Prices are currently trading 4-5 cents lower given the swollen surplus and benign weather conditions. The June contract is still trading about 35 cents above May.
Today’s expiring May 24 natural gas contract has spiked down to a 1.482 overnight low similar to the last two expirations.
During the March 24 expiration, the contract spiked down to a 1.511 low before closing the session at 1.615. During the April 24 expiration, the contract spiked down to a 1.481 low before closing the session at 1.575.
And in today’s early trade, the May 24 contract spiked down to a 1.482 low yesterday at 6 pm. It again spiked down to a 1.489 low at 5 am this morning.
It will be interesting to see if the May contract can again hold above 1.480-1.500 support in today’s trade. Open interest in the May contract is under 3,000 contracts which could lead to even more volatility in today’s session.
The June 24 contract which becomes the spot contract on today’s close is currently trading .400 above the current price of the May 24 contract which is going to create a massive gap on the daily continuation chart.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 34.78
This material should be construed as the solicitation of an account, order, and/or services provided by the FCM Division of StoneX Financial Inc. (“SFI”) (NFA ID: 0476094) or StoneX Markets LLC (“SXM”) (NFA ID: 0449652) and represents the opinions and viewpoints of the author. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Additionally, this material should not be construed as research material. The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand the risks prior to trading. Past results are not necessarily indicative of future results.
All references to and discussion of OTC products or swaps are made solely on behalf of SXM. All references to futures and options on futures trading are made solely on behalf of SFI. SXM products are intended to be traded only by individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM.
SFI and SXM are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact designated personnel from SFI or SXM for specific trading advice to meet your trading preferences.
The StoneX Market Indicator provides an overall view of market sentiment for a commodity based on the quantification of fundamental, technical and historical market data related to that commodity. The StoneX Market Indicator History graphically represents each day’s actual very bearish to very bullish signal. This history contains the sum of all factors, excluding weather forecasts.
The StoneX Value Matrix provides a measure of historical value by analyzing historical price data distributed into 10 deciles. The prices are adjusted for inflation using the Producer Price Index (PPI) published by the U.S. Bureau of Labor Statistics.
Reproduction or use in any format without authorization is forbidden. © Copyright 2024. All rights reserved.
