

Spot month gas prices surged 5% on Friday with gains for the week were a record 33% as feedgas flows to export facilities, particularly at Freeport, increased. Forecasts for hotter weather in Texas also boosted expectations for stronger power generation demand while production cuts are starting to help rebalance the market. June nat gas settled 10.7 cents higher Friday at $2.142.

The number of nat gas and oil drilling rigs fell for a 2nd consecutive week, leaving total rigs operating at their lowest level since Jan 2022. Natural gas drilling rigs fell by 3 last week to 102 rigs while oil rigs posted their largest weekly decline since Nov, falling by 7 to 499 rigs. Gas drilling are at their lowest since Dec 2021 and are down 55 rigs from a year ago. The overall rig count is down 143 rigs, or 19%, from last year. This downward trend in drilling rigs is likely to continue.
Feedgas demand to Cameron LNG fell at the end of last week as seasonal maintenance begins. Cheniere is not expecting to see any extended outages this summer at Sabine Pass or Corpus Christi as it strives for a less extensive maintenance season than last year.
Feedgas flows to Freeport hit a 2 month high on Sunday at 1.4 BCF/day, further indicating outages are being wrapped up. This is well above April’s average of just 0.4 BCF/day. It is likely that 2 trains are now operating at Freeport given each train can turn about 0.7 BCF/day of gas into LNG. Total feedgas demand has risen from an average of 11.9 BCF/day in April to 12.4 BCF/day so far in May.

Prices are extending last week’s rally amid a resurgence in feedgas flows to Freeport and stronger cooling demand in Texas as heat is expected to intensify later this week. The forecast for the Midwest and East has turned cooler since Friday for the end of this week into next weekend. The next 15 days are forecast to yield 50.5 CDDs, which is lower than normal and lower than last year, while HDDs are forecast at 54.8.
June futures are currently trading 7 cents higher.

A bullish breakout in Friday’s late day trade as the June 24 contract rallied over 2.070-2.080 trend line resistance to close the day at 2.142, up .107 (5.3%). For the week, the contract was up .219 (11.4%).
The near term and possibly long term trend is now up with bullish short and long term trend following indexes along with bullish 10 and 40 day moving average alignment.
The mid-December 2.235 low is the next area of resistance followed by the 2.311 January low. Longer term resistance is the 200 day moving average at 2.465.
Former trend line resistance broken on Friday near 2.070 is now the first area of support today followed by the 10 day moving average at 1.905.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -67.67






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