Early session losses accelerated yesterday following a bearish storage injection. Additional pressure stemmed from approaching shoulder season weather conditions, suggesting a retreat in cooling needs. A heavy selloff drove the Sep contract down 12.4 cents on the day to settle at $2.053 while Oct futures ended with losses of 12 cents.
The EIA reported a larger than expected build of 35 BCF for the week ended Aug 16, leaving total gas in storage at 3.299 TCF. The number outpaced estimates as well as last year’s build of 23 BCF but still fell short of the 5 yr avg increase of 41 BCF. The surplus to the 5 yr avg now stands at 369 BCF, or 12.6%. Total demand last week fell by 3.9 BCF/day, led by a 3.2 BCF/day drop in power burn while output fell 1 BCF/day week over week.
Early estimates for the week ending Aug 23 range from 26 BCF to 42 BCF with an average build of 36 BCF expected. This compares to last year’s build of 28 BCF and the 5 yr avg build of 43 BCF.
The West is expected to see a near record cool end to the week with temps slowly rebounding next week. Current record high temps in Texas swill weaken slightly over the coming 5 days although conditions will remain warmer than normal. Unseasonably cool readings across the Midwest and East this week will be replaced with much hotter conditions over the coming days. Widespread above normal readings across the eastern half of the US will turn cooler during the 11-15 day period. Maxar projects the next 15 days will yield 150.6 CDDs which is near the 10 yr norm.
Conditions are ripening for more tropical storms to develop in the Atlantic next month. Accuweather is predicting a “supercharged September” featuring anywhere from 6 to 10 named storms given a major shift in the weather pattern. An increase in tropical activity could potentially result in downside pressure for the gas market. Accuweather is still predicting 20 to 25 name storms this year with only 5 named storms season to date.
Prices are pushing lower again this morning.
The September 24 natural gas contract was heavily sold in Thursday’s session breaking out under 2.100 support in early trade to close the day at 2.053, down .124 (5.7%).
2.000 is near term support followed by the 1.856 July low. The July low coincides with the 78% retracement support of the 2024 uptrend at 1.850.
If 1.850 support is broken, the final 88% retracement at 1.650 will become the next downside objective.
Former support at 2.100 is now resistance followed by the 10 day moving average at 2.155.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 41.86
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