The nat gas market failed to maintain early strength yesterday even after last week’s storage report cut into the surplus for a 4th straight week. Profit taking lent pressure as the June contract has remained in overbought territory recently. June futures settled 18.5 cents lower at $2.657.
While conditions in Texas are expected to be pretty hot over the long weekend, much of the northern 2/3 of the US will see comfortable readings, keeping demand levels near normal.
Total demand has remained in the 95 BCF/day range over the past several days, coming in this morning at 95.2 BCF/day. A 1.3 BCF/day decline in power burn is being offset by a 1.2 BCF/day rise in res/comm usage.
LNG feedgas demand is flat on the day at 12.9 BCF/day. Golden Pass's train 1 is now expected to startup in June 2025 rather than Jan 2025.
Last week’s storage injection came in lower than expected and lower than normal at 78 BCF. This trailed the 5 yr avg by 14 BCF and previous year’s build by 19 BCF. Total gas in storage as of May 17 stands at 2.711 TCF, 606 BCF above the 5 yr avg and 402 BCF above last year. Production cuts have aided the narrowing of the surplus. Output this month has so far averaged 99 BCF/day, about 3.6 BCF/day lower than last year.
Another bullish injection is projected for the week in progress with storage models currently calling for a build in the 82-88 BCF range. This compares to last year’s build of 106 BCF and the 5 yr avg build of 104 BCF.
According to the NOAA, this year’s hurricane season could be the worst ever. This season is expected to have 17-25 named storms, 8-13 hurricanes and 4-7 major hurricanes. A quick transition to La Nina is expected this summer, leaving conditions conducive to strong activity as wind shear tends to lessen. Hurricanes tend to have a strong impact on power burn and shut in LNG exports.
EQT Corp, the largest US gas producer has reportedly increased output this month. Other gas producers have not followed suit but prices could decline if more gas were to come online. Production is coming in this morning 0.4 BCF higher on the day at 101.4 BCF/day.
The market continues to decline this morning on potentially more profit taking heading into the long weekend and ahead of next week’s June 24 expiration.
The June 24 natural gas contract finally sold off on Thursday following a 4-week rally higher as sellers came in during late session trade dropping the contract to a 2.657 daily settle, down 185 or 6.5%.
Volume of 116,689 contracts was at a 1-month low suggesting profit-taking in Thursday's session.
Overnight selling has the June contract testing the 10 day moving average at 2.580 today. The 10 day average has not been tested since the latest rally began in late-April.
If 10 day moving average support is broken, the 200 day average at 2.455 will become the next area of support.
Thursday’s 2.924 is near term resistance followed closely by the 78% retracement of the 2024 downtrend at 2.970.
Daily RSI which has been in the area considered “overbought” for 6 consecutive days fell back under the 70 level on Thursday and is currently at 62.51.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -62.51
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