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Daily Natural Gas Market Update 5-17-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM DivisionHeather.Wine@stonex.comT
StoneX Value Matrix
image-20240515220532-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20240515220546-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Spot month gas prices traded near 16 week highs Thursday after storage data came in below expectations and trimmed the surplus by 20 BCF.  Short covering and technical drivers added further momentum to the rally.  June futures gained 7.9 cents to settle at $2.495.  The June contract has gained nearly 60 cents since the beginning of May.

 

image 94663
Source: Bloomberg, CME

Stocks during the week ended May 10 rose by 70 BCF, falling behind the 5 yr avg build of 90 BCF and last year’s build of 93 BCF.  Total gas in storage now stands at 2.633 TCF, 620 BCF above the 5 yr avg and 421 BCF above last year. The 5 yr avg surplus has narrowed by 58 BCF over the past 2 months.

Limited cooling/heating needs this week offset rising LNG feedgas demand.  Next Thursday’s report is expected to come in closer to historical norms with estimates suggesting a build in the 88 to 97 BCF range. This compares to last year’s build of 97 BCF and the 5 yr avg injection of 92 BCF.

 

image 94664
Source: EIA/DOE

While all 3 trains at Freeport are back online, maintenance at Cameron LNG is keeping total feedgas demand below full capacity.  LNG feedgas is estimated at 13 BCF for today, 0.4 BCF higher on the day. Total demand however is coming in 1.8 BCF lower on the day due to a 1.4 BCF/day drop in power burn and a 0.6 BCF/day decline in res/comm usage.

Cooling demand could pick up as readings in Texas are expected to be steadily above normal with highs likely to reach the mid 90’s.  For the month, a total of 93 HDDs are expected, which would be the 2nd lowest for May while 143 CDDs are expected, the 7th highest for the month. 

​​image 94665
Source: NOAA

Nat gas prices continue adding to recent gains this morning with June futures trading 8 cents higher on the day. 

Technical Analysis 
 
image-20240517084330-1
Source: Bloomberg, CME

Another impressive rally in the natural gas market on Thursday as the spot June 24 contract traded up to a new 15-week high settling at 2.495, up .079 (3.3%).

The June contract has closed up 9 out of the past 11 sessions breaking out above the 200 day moving average on Thursday on good volume of 229,617 contracts.

Thursday’s 2.575 high is near term resistance followed by 2.660, the 61.8% retracement of the January-March downtrend.

Daily RSI is at 74.33, in the “overbought” area, with bearish divergences continuing to form on the 60-minute chart oscillators.  While neither is an outright sell signal, they may be warning of an impending downside correction.

The 200 day moving average at 2.455 is near term support followed by the 10 day moving average currently at 2.335.

Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish

Relative Strength Index -74.35 (in overbought area)

Seasonal Prices
image 94667
Source: Bloomberg, CME
image 94668
Source: Bloomberg, CME
image 94669
Source: Bloomberg, CME
image 94145
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 94144
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 94666
Source: Bloomberg, CME
 
Disclaimer

This material should be construed as the solicitation of an account, order, and/or services provided by the FCM Division of StoneX Financial Inc. (“SFI”) (NFA ID: 0476094) or StoneX Markets LLC (“SXM”) (NFA ID: 0449652) and represents the opinions and viewpoints of the author. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Additionally, this material should not be construed as research material. The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand the risks prior to trading. Past results are not necessarily indicative of future results. 
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