

Nat gas prices settled lower Wednesday pressured by mild shoulder season weather that continues to weigh on demand. LNG feedgas flows have also been on the decline since last week. The market is also anticipating a sizable storage injection, adding to the overall bearish sentiment. June futures settled with a 15.5 cent loss at $3.492.

Today’s storage report is projected to show a 3rd straight triple digit injection of 109 BCF for the week ended May 9. This compares to last year’s build of 73 BCF and the 5 yr avg build of 83 BCF. Fundamentals were little changed on the week with the market lengthening by about 770 MMcf/day.
Early estimates for next week’s report range from 98 BCF to 116 BCF with the average increase at 106 BCF. An injection within this range would once again outpace historical comparisons.
Production levels remain stagnant with output yesterday at 105.5 BCF/day. So far this month, output is averaging 105.3 BCF/day.
LNG feedgas demand slid yesterday to 14.9 BCF/day, down 0.5 BCF/day from Tuesday and 1.2 BCF/day lower than Friday’s level of 16.1 BCF/day. Platts estimates that flows will average 15 BCF/day over the next 2 weeks. Month to date, feedgas demand is averaging 15.2 BCF/day. Lower volumes have been driven by maintenance projects with volumes expected to recover in late May and early June.

The market continues to trade lower this morning ahead of weekly storage data. Forecasts for cooler than normal temps across the Eastern US during the 6-10 day also remain a bearish factor.
Technical Analysis

The June 25 natural gas contract broke out under daily continuation chart 10 and 40 day moving average support on Wednesday turning the near term trend back down.
The June contract lost .155 (4.2%) on Wednesday closing at 3.492 and is down an additional .040 into today’s early trade.
3.400-3.410 is near term support followed by the 200 day moving average at 3.170. Longer term support is the 2.859 April low. A close under this low will turn the longer term trend down.
The 10 and 40 day moving averages broken as support on Wednesday are now resistance at 3.575-3.590 followed by Monday’s 3.840 high.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 47.43






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