

Spot month prices started the day stronger on signs that producers are slowing down production. Gains picked up momentum after storage data revealed a 4th straight narrowing of the surplus. Prices retreated later in the day to settle at $2.13, 1.5 cents higher on the day.

The EIA reported another bullish injection for the week ended Aug 2 of 21 BCF. The number was 5 BCF lower than the average estimate while also undershooting the 5 yr avg build of 38 BCF and last year’s build of 25 BCF. Supplies currently stand at 3.27 TCF, 424 BCF above the 5 yr avg and are 248 BCF last year.
The outlook for the week ending Aug 9 suggests another supportive report given a tighter supply/demand balance this week and very strong power burn levels. Current estimates range from a withdrawal of up to 11 BCF to an injection of 15 BCF. The number will compare to last year’s build of 33 BCF and the 5 yr avg build of 43 BCF.
LNG feedgas demand has remained steadily above 12 BCF/day this week while output declined due to a wave of maintenance activities in the Permian Basin, Appalachia and the Rockies. Platts estimates output this morning at 100.9 BCF/day, more than 2 BCF/day lower than levels hit this past weekend. Output is estimated to average 101.1 BCF/day over the next 2 weeks.

The rally continues this morning for a 4th straight session given supportive storage estimates, production curtailments, technical buying and short covering. Weather forecasts also show above normal temps returning to much of the US during the latter half of August.

The near term trend for the natural gas market may have turned back higher this week following an 8-week downtrend.
The spot September 24 natural gas contract closed higher for a 3rd day while closing above the 10 day moving average for a 2nd day on Thursday to settle at 2.127.
Volume was heavy for a 2nd day at 232,204 contracts, the highest daily volume since the June high.
The September contract traded down to the 10 day moving average on Thursday at the lower-2.000 level. This average was broken as resistance on Tuesday. With 10 day moving average support holding, prices moved back toward unchanged into the close.
Thursday’s 2.179 high is near term resistance followed by last week’s 2.270 high. Longer term resistance is at 2.350-2.360 where the 40 and 200 day moving averages have converged.
10 day moving average support is at 2.035 today. A close back under this level will turn the near term trend back down with 1.850 becoming the next area of support.
Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -48.40






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