

Spot month prices fell Monday on expectations for low near term demand that should help plump injections. LNG feedgas flows have also been trending lower amid seasonal maintenance. This market continues to weigh bullish technicals against bearish leaning fundamentals. The spot month contract fell 8 cents yesterday to settle at $3.55.

Production has been hovering near the 105 BCF/day level this month. Output this morning is pegged at 105.2 BCF/day. Producers have indicated plans to scale back drilling and well completions in the Permian Basin in response to low crude prices. This could ultimately tighten supply of associated gas.
Mild weather conditions are expected to keep both heating and cooling demand subdued over the next week, typical of shoulder season. Demand should begin to pick up as we head into late May and early June with heat starting to build across key regions. Yesterday’s Weather Desk outlook projected 48 CDDs for the coming 15 days which is on the low side of normal. Their 6-10 day outlook trended warmer for the Midwest and East while cooler conditions move into the West. average 106.1 BCF/day over the next 7 days.

LNG feedgas flows have been trending lower the past few days, coming in yesterday at 14.9 BCF/day. Platts shows flows this morning at 14.2 BCF/day. A drop in flows at Cameron LNG and Corpus Christi is driving the decline as it continues to conduct maintenance.
Early weakness this morning has dried up with the June contract currently trading 5 cents higher.
Technical Analysis

The June 26 natural gas contract closed .080 lower settling at 3.550 on Monday after failing to clear 40 day moving average resistance on early strength.
A potentially bearish dark cloud cover candlestick formed on Monday but will need to be confirmed with lower trade today.
The trend remains mixed with neutral moving average and trend following index alignment.
The 40 day moving average at 3.670 remains near term resistance. If broken, 3.790-3.800 and 4.000 will become the next areas of resistance.
10 day moving average support is at 3.295 today followed by the 200 day average at 3.115. Longer term support is at the 2.859 set two weeks ago. A close 2.859 support will turn the primary trend back down.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 51.06






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