

Nat gas prices gave back much of Friday’s gains during Monday’s session as res/comm usage and LNG feedgas flows declined. Revised forecasts for the latter half of June also suggested less cooling demand than previously expected. Lower demand should keep the stronger than normal injection pace intact for the time being. June NG settled 14.9 cents lower at $3.646.

Output levels started the week out strong after picking up over the weekend. Production was estimated yesterday at 106.2 BCF/day. Output this morning however is coming in 1.6 BCF lower on the day at 104.6 BCF/day. Month to date, production is averaging 105.2 BCF/day. Stagnant output levels are boosting supply side concerns as we approach cooling season. Without an increase in production to help meet summer demand, injections this summer could be limited, impacting winter storage.
Wind generation is running below last year and just above the low end of the 4 yr avg range. This is resulting more reliance on natural gas for electric generation.

Prices are trading mixed this morning with support stemming from output levels that continue to show little indication of sustained growth. Expectations for a lofty storage injection this week is keeping the upside limited.
Technical Analysis

The June 25 natural gas contract rallied up to a 3.840 morning high on Monday but turned lower in mid-day trade. By session’s close, the contract had lost .149 (3.9%) settling the day at 3.646.
A potentially bearish outside range day formed on Monday but follow through selling so far today has been limited.
The June contract closed just over daily continuation chart 40 day moving average support at 3.610 today. The 40 day average is closely followed by the 10 day average at 3.580.
If 10 and 40 day moving average support is broken, the 200 day average at 3.155 will become the next longer term support.
The trend at this point is neutral to higher with prices expected to remain in a choppy, sideways range.
Monday’s 3.840 high is near term resistance followed by the 50% retracement of the March-April downtrend at 3.880. Longer term resistance is at 4.000.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 54.56






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