

Reversing Tuesday’s losses, nat gas prices settled higher Wednesday as the market focused on upcoming demand growth while output continued to lag. Weather models continue to suggest above to much above normal temps across the Central US into the Midcon and NE while the West cools off. Overseas prices also traded higher as the EU says it could fully replace Russian nat gas and LNG by 2027. The spot month settled 15.8 cents higher at $3.621.

Today’s storage report is expected to show stocks rose 101 BCF in the week ended May 2. The avg estimate compares to last year’s build of 81 BCF and the 5 yr avg build of 79 BCF. Estimates ranged from a build of 96 BCF to 107 BCF. Supply/demand fundamentals were little changed last week, tightening about 600 MMcf/day week over week.
Early estimates for next week’s report suggest an injection of 107 BCF which would once again outpace both last and the 5 yr avg comparisons of 73 BCF and 83 BCF, respectively.
Forecasts this morning show a big warm up for the Central US next week with the hottest temps expected on Wed and Thur. A total of 75.3 CDDs is expected across the ERCOT region over the coming 6-10 day period with 29.1 CDDS expected in the MISO regions. Both rank 4th hottest. Power burn is projected to increase to an avg of 33.6 BCF/day during the 8-14 day period, up from today’s 31.4 BCF/day while res/comm usage will fall to 11.3 BCF/day, down from today’s 15.1 BCF/day.
Feedgas demand is recovering from Tuesday’s low of 12.6 BCF/day, estimated this morning at 15.1 BCF/day.

Prices continue to advance this morning with June futures up 4.5 cents.
Technical Analysis

The June 25 natural gas contract reversed course back higher on Wednesday following two days of selling nearly erasing the previous two days’ losses as it closed the day at 3.621.
The June contract on Wednesday closed just under 40 day moving average resistance at 3.640 today.
40 day moving average resistance has been broken in overnight trade turning Monday’s 3.747 high into the next area of resistance.
A breakout above 3.747 will turn the 50% retracement resistance of the March-April downtrend at 3.880 into the next upside objective followed by 4.000.
If resistance holds, 10 day moving average support is at 3.425 today followed by the 200 day average at 3.130. Longer term support is the late-April 2.859 low. A close under this low will turn the trend back down.
Bearish divergences on the 60-minute chart indexes suggest a near term high may be forming and today’s early breakout will not hold.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 56.03






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