Early gains failed to hold yesterday as midday weather forecasts shed about 5 cooling degree days while LNG feedgas demand remained depressed in the wake of Hurricane Beryl. Spot month prices rallied about 3% early in the day on forecasts for intense heat to remain in place for much of July. Aug futures ultimately settled 2.2 cents lower at $2.344, down more than 10 cents from the session high.
After proactively shutting down on Sunday, Freeport remained offline Wednesday amid widespread power outages. Feedgas deliveries to Freeport remained near zero yesterday while flows to other major terminals were unaffected. Operations at Freeport are set to resume as soon its safe to do so.
Total LNG feedgas demand has averaged about 11.1 BCF/day over the past 2 days, down 2 BCF/day from pre storm levels. Feedgas demand remains steady at 11.1 BCF for today.
Rising supply helped lift injections last week from the previous week’s build of just 32 BCF. The EIA is expected to report a build of 54 BCF for the week ended July 5, which would fall below the 5 yr avg for a 9th straight week. The estimate compares to the 5 yr avg and previous year build 57 BCF.
With widespread heat forecast through July and August, the EIA boosted its demand expectations which could help steadily curtail the oversupply. The agency is now forecasting stocks to end injection season 6% higher than the 5 yr avg due to relatively flat production and stronger electric power sector demand. Supplies are currently about 19% above the 5 yr avg.
Output is coming in this morning at 100.3 BCF/day, up 0.3 BCF on the day. According to the EIA’s July STEO, dry production will climb to an average of 104 BCF/day for the 2nd half of 2024, which is far from record levels. Year to date, production is averaging about 101.2 BCF/day.
Prices are trading lower this morning as depressed feedgas demand overshadows forecasts for record heat during the latter half of July.
The August 24 natural gas contract rallied higher in Tuesday’s early trade topping out at a 2.448 morning high.
The rally failed to clear 200 day moving average resistance resulting in selling into the close with the August contract settling the day at 2.344, down .022.
The 50% retracement of the 2024 uptrend at 2.320 remains near term support. If broken, the 61.8% retracement at 2.120 will become the next downside objective.
The 10 and 200 day moving averages on the daily continuation chart have converged at 2.450-2.460 today and are near term resistance.
Longer term 40 day moving average resistance is at 2.650. A close above both resistance areas is needed to turn the trend back higher.
Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 39.04
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