

Early session losses yesterday turned into gains on pre expiration position squaring with strong output offsetting expectations for stronger demand heading into next week. Since last Friday, production levels remained at or above 106 BCF/day through yesterday. With summer heat yet to arrive across the Eastern US, prices continue to trade in their sideways pattern. Today’s expiring June contract settled 6.4 cents higher at 3.398 while the July contract rose 1.9 cents to settle at $3.744.

This week's storage report is expected to show a 5th straight triple digit build however the number is likely to be only slightly above the 5 yr avg. For the week ended May 23, a 100 BCF injection is anticipated with estimates ranging from 82 to 125 BCF. This compares to last year’s build of 84 BCF and the 5 yr avg build of 98 BCF. The estimate is lower than the previous week’s build of 120 BCF as the market tightened last week. Consumption rose about 5 BCF/day while dry production rose by just 200 MMcf/day and Canadian imports increased 1 BCF/day.
LNG feedgas demand has stayed between 14.5 and 15.4 BCF/day over the past week Month to date, feedgas demand is averaging 15.2 BCF/day. Terminal maintenance continues to impact flows. Two of 6 trains at Sabine Pass are undergoing maintenance while Cheniere’s Creole Trail Pipeline began maintenance over the weekend that will last through June 22. Offsetting some of the lost volume will be the conclusion of maintenance on Cameron LNG in the next few days.

Prices are currently trading lower this morning despite a drop in output. As July becomes the front month, upside potential is likely as warmer temps tighten supply/demand fundamentals.
Technical Analysis

Today’s expiring June 25 natural gas contract traded in a fairly wide .231 range on Tuesday but continues to trend in a narrowing sideways range.
The June contract has been alternating over the past 6 sessions between daily continuation chart 200 day moving average support at 3.220 today and the 40 day moving average as resistance at 3.445.
Both averages were tested on Wednesday before the June contract closed the session at 3.398, up .064. Prices are down in today’s early trade.
Trend following indicators remain mixed but 10 day 40 day moving average alignment is negative.
The will be a huge downside gap following today’s June expiration as the July contract is currently trading .360 above the price of the June contract.
The most likely scenario for prices is a continuation of a choppy, sideways range.
Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 47.15






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