Prices declined after the EIA reported a slightly larger than expected injection for last week, although the surplus still managed to narrow. The build marked the 10th smaller than normal injection in the past 11 weeks. Prices continued to decline through the afternoon on rising output. The spot month Aug contract settling 7.6 cents lower at $2.041.
For the week ended July 19, stocks rose 22 BCF to 3.231 TCF. The build fell short of both last year’s 23 BCF and the 5 yr avg build of 31 BCF. The surplus to the 5 yr avg now stands at 456 BCF, or 16%, and has narrowed by 222 BCF since mid-March. Falling demand last week helped loosen the supply/demand balance. Power demand averaged 47.5 BCF/day while LNG feedgas demand fell to an average of 11 BCF/day. Gas output moved higher but Canadian imports fell.
For the week ending July 26, stocks are expected to post a heftier build of about 43 BCF which would higher than both last year and the 5 yr avg builds of 15 BCF and 33 BCF, respectively.
Reports yesterday claimed that Freeport LNG will likely resume full operations at all 3 trains early next month. Train 3 is expected to be fully operational by the end of July while trains 1 and 2 will gradually restart. Freeport was expected to receive about 1.2 BCF/day of feedgas deliveries yesterday based on early nominations.
LNG feedgas demand is estimated for today at 12.8 BCF/day. Platts projects it will remain near this level over the next 2 weeks.
Spot month NG is trading a touch lower this morning prior to the EIA report as output levels rise. Output this morning is coming in at 102.9 BCF/day.
The August 24 natural gas contract has closed down three consecutive sessions settling Thursday at 2.041 just above primary support.
Volume was low at 44,964 contracts.
Primary support is the 2.015 low set last week. If lower-2.000 support is broken, the 78% retracement of the 2024 uptrend at 1.850 will become the next area of support.
Trend following oscillators on the 60-minute chart have formed bullish divergences which may indicate a double bottom low is forming.
If 2.015 support holds, the 10 day moving average currently at 2.125 will become the first resistance area.
The seasonal trend favors a rally higher into the August/September time frame.
Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -35.61
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