

The market ended lower heading into the weekend after early session gains dried up on Friday given the lack of fundamental support. June nat gas settled 2.8 cents lower at $3.334. For the week, prices fell about 12% after rising 29% over the previous 2 weeks.

Res/comm demand was mostly lower throughout last week’s trade, though it saw a slight uptick heading into the weekend. Power burn rose steadily last week but leveled off on Friday. The changes in consumption occurred as heat moderated across the South while cooler readings spread throughout the central and eastern US.
Res/comm usage is seeing a sharp increase today of 3.9 BCF while power burn is coming in flat. With temps expected to remain below to much below normal this week across the Northern ¾ of the US, res/comm will remain elevated.
LNG feedgas demand is turning more supportive, with flows trending higher since last Thursday. Volumes on Friday were estimated at 14.7 BCF/day and have climbed to 15.7 BCF/day this morning. The gains have been driven by recovering flows at Corpus Christi and Freeport along with consistently strong levels at the Plaquemines terminal. Feedgas demand is averaging 15.2 BCF/day this month, down from April’s record of 16 BCF/day.

Prices continue to tumble this morning with the spot month trading 17 cents lower as a lack of weather support contributes to the downside.
Steady production and lackluster demand is expected to keep stocks building at a faster than normal pace in the coming weeks. This week’s report is expected to show a build of 106 BCF for the week ended May 16, which compares to last year’s build of 78 BCF and the 5 yr ag injection of 87 BCF.
Technical Analysis

The June 25 natural gas contract natural gas contract closed lower 4 out of 5 days in last week’s trade settling Friday at 3.334.
For the week, the June contract was down .461 (12.1%) closing lower on a weekly basis for the 1st time in 3 weeks.
The near term trend turned back down last week after the June contract broke out under daily continuation chart 10 and 40 day moving averages near the 3.600 level.
The June contract has gapped lower in today’s early trade and is testing 200 day moving average support at 3.180.
If 3.180 support fails to hold, the 2.859 April low will become the next downside objective.
The overnight gap between 3.270-3.305 is near term resistance followed by the 10 and 40 day moving averages currently at 3.510 (10 day) – 3.535 (40 day). 10 and 40 day moving average alignment is now bearish.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 39.70






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