May futures went off the board Friday, trading down more than 16 cents at one point before bouncing higher amid low volume. The June contract came under pressure from forecasts for mostly benign weather over the next 10 days while the relentless surplus remains a hindrance on prices. May futures settled 2.4 cents lower at $1.614 while June NG fell 6.3 cents lower at $1.923.
Feedgas flows to Freeport were estimated at about 3% of capacity on Friday after another trip on Train 3 forced it to go offline. LNG feedgas flows are on track to rise this morning to a 3 week high as Freeport began to pull in more feedgas on Sunday. Total feedgas demand is on track to rise from 12.2 BCF/day Sunday to a 3 week high of 12.9 BCF/day for Monday, indicating that at least 1 train is back online. This compares to near zero gas flows Apr 24-27.
Nat gas drilling rigs fell by 1 last week to 105 total rigs while oil drilling rigs fell by 5 to 506 total rigs. Active gas drilling rigs are down 56 rigs from last year while oil rigs are down 85 from a year ago. The EIA’s Drilling Productivity Report shows the number of well completions across all 7 regions fell to 859 as of March, down 15% from a monthly completion pace of more than 1,000 wells back in Sep and Oct.
Output slid last week, dropping below 100 BCF/day as producers aim to rebalance the oversupplied market. This is helping hold up prices at the back end of the curve.
Heating demand increased last week following cooler temps across the Great Lakes and NE while cooling demand saw a boost from warmer temps across TX and the SW. Weather patterns this week are expected to warm up across the Midwest into the Mid-Atlantic. Maxar’s 6-10 day forecast taking us thru May 8 trends cooler in the West and warmer from the Midwest to the East. Summerlike temps are not expected to arrive until at least the 2nd half of May.
Strengthening export demand and soft production levels are helping boost prices this morning. June NG is currently trading more than 6 cents higher on the day.
The new front month June 24 natural gas contract closed Friday at 1.923, .309 above the price of the expired May 24 contract.
This has created another large downside open gap on the daily continuation chart between 1.600-1.920.
The last two times this occurred following expirations of the March and April 24 contracts, prices have quickly weakened to close the gap.
If this happens for a third consecutive month, the June contract should trade back down to the lower-1.600 area in upcoming trade.
2.000-2.010 is near term resistance followed by the mid-December 2.235 low.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -59.97
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