

Nat gas prices surged higher to start the new week as hotter weather forecasts and record high LNG feedgas demand boosted upside momentum. The Weather Desk added in 6.6 more CDDs to their 15 day forecast since Friday bringing the total to 197.8 CDDs. This is higher than both the 10 and 30 yr norms and ranks 10th hottest for this timeframe. Aug futures rose 5.2 cents on the day to settle at $3.466.

Hotter conditions forecast for the latter half of July have strengthened demand expectations, particularly for the 8-14 day period. Power burn is expected to average 52 BCF/day during that period which would be higher the estimated 7 day average of 47.8 BCF/day. Power burn is estimated at 48.9 BCF for today.
LNG exports have increased to the highest levels so far this summer, reaching 16.5 BCF/day this past weekend. Flows to Plaquemines hit a record of 2.9 BCF/day on Sunday, outpacing its previous all time hit in early June while Corpus Christi’s phase 3 also appears to be ramping up. Month to date, feedgas demand is averaging 15.8 BCF/day, up 4.1 BCF/day from last year.
Production hit 107 BCF/day on Monday and is estimated this morning at 16.4 BCF/day. Month to date, output is averaging 105.8 BCF/day. Production levels remain a bearish factor and should help keep further rallies in check.

Prices are trading flat to lower this morning as LNG flows have ticked down mostly because of lower flows to Corpus Christi. A low pressure system moving across Florida into the GOM this week could threaten feedgas demand. The storm currently has a 30% chance of strengthening into a tropical storm.
Technical Analysis

The August 25 natural gas contract gapped higher by .090 from Friday’s close to begin Monday’s session.
The gap higher broken the August contract above daily continuation chart 10 and 200 day moving average resistance at the lower-3.400 area.
The rally topped out at a 3.499 morning high which coincided with the 40 day moving average at 3.500. With resistance holding, prices pulled back slightly into the close with the August contract finishing the day at 3.466, up .152 (4.9%).
The market remains in a sideways range with the spot price current trading at the same level it was back last November. Trend following indicators have been turning more bearish but sell off attempts continue to find good buying support at the lower-3.200 area.
The 40 day moving average at 3.500 remains primary resistance. If broken, the 3.751 high set two weeks ago will become the next area of resistance.
200 day moving average support is at 3.430 followed by the 10 day average at 3.380. If moving average support is broken, last week’s 3.149 low will become the next area of support.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index 48.59






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