By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles
Nat gas prices rallied most of last week, with only Friday’s trade seeing a break. After hitting 13 yr highs on Thursday, spot month gas prices fell 8% on Friday, the biggest 1 day percentage drop since Feb. June futures settled 74 cents lower at $8.043. Despite Friday’s decline, prices were still up 11% for the week.
Supply levels will be tested this week as the next 5 days will feature early season heat across the central US. Temps are expected to approach, if not exceed, record levels. Record high CDDs are forecast for the South Central region today thru Wed. Cooling degree day totals will be more typical of late June.
Readings will cool down across the Midwest during the 6-10 day period and remain cooler through the 8-14 day period.
Nat gas prices are seeing a further break this morning to 1 week lows on an increase in output. Output rose to 95.9 BCF/day on Sunday, the highest since late Dec. Reuters says output so far this month is averaging 94.8 BCF/day, up from April’s 94.5 BCF/day. A decline in crude prices is also weighing on nat gas.
Power burn is on the rise to start the week, coming in up 1.4 BCF/day at 26.7 BCF/day. Power demand is soaring in Texas given extreme heat.
Total demand for today is projected at 86.6 BCF. Demand levels are expected to drop to an average of 85 BCF/day during the 8-14 day period as readings turn more seasonal.
A volatile week of trade in the natural gas market last week which was completed by a heavy sell off in Friday’s session.
Over the first four days of trade last week, the spot June 22 contact was up 1.539 or 21% by Thursday’s 8.783 close.
In Friday’s session, the June contract rallied up to a 8.994 morning high but sold off into the close finishing the day at 8.043, down .740 or 8.4%.
For the week, the contract was up .799 or 11%.
A near term top may finally be in place with last week’s reversal. 10 day moving average support is at 7.695 today.
If the 10 day average is broken, 7.500 will become the next area of support. Longer term 40 day moving average support is at 6.440.
8.200 is near term resistance followed by last week’s 8.994 high. A breakout above last week’s high will turn the August 2000 monthly high at 10.200 into the next upside resistance.
Technical Indicators:
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index – Bullish
Relative Strength Index - 59.22
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