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Daily Natural Gas Market Update 5-29-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20240529090117-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20240529090138-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Today’s expiring June contract rose yesterday on stronger demand expectations while LNG feedgas flows also trended higher.  June futures settled 7 cent higher at $2.59 while July contract rose 2% to settled at $2.83.

Feedgas deliveries to Cameron LNG have been at their highest since late April as planned maintenance appears to be completed.  This helped boost overall feedgas demand to 13.3 BCF/day as of this morning,  the highest level since late March.  LNG exports to Mexico are also near record highs at about 7.2 BCF/day. 

 

image 95189
Source: Bloomberg, CME

The market is anticipating another below normal injection for the week ended May 24 as stronger power burn and warmer temps kept a lid on supply available for storage last week.    Platts is projecting a build of 78 BCF while Refinitiv is calling for a build of 89 BCF.  In either case, the build would fall short of the 5 yr avg addition of 104 BCF and the year ago build of 106 BCF.  

Warmer temps last week boosted gas fired power demand by nearly 4 BCF/day.  This was partly offset by a drop in res/comm demand.  Stronger output and higher imports from Canada added supply length.  Overall, the market tightened by 1.3 BCF/day.

image 95190
Source: EIA/DOE

Production has been leveling off recently, averaging about 101.4 BCF/day over the past week.  Month to date, output is averaging 99.9 BCF/day, down 2.6 BCF/day from May 2023.  Output estimates this morning are down 1.1 BCF/day at 100.2 BCF/day. The decline appears to be concentrated in the NE. Output could have further to rebound as EQT Corp is said to be returning curtailed volumes. 

​​image 95191
Source: NOAA

Prices are pulling back this morning ahead of today’s expiration and on signs that curtailed production could return as weather begins to heat up next month.  

The spot month has declined by an average of more than 5 cents on its last trading day in 11 of the past 14 expirations.  Jun24 NG is currently trading down more than 10 cents. 

Technical Analysis 
 
image-20240529090343-3
Source: Bloomberg, CME

Today’s expiring June 24 natural gas contract closed .070 higher on Tuesday after holding above 200 day moving average support on early weakness ending a two day run of consecutively lower closes

Post-holiday volume was low at 86,031 contracts.

After closing at 2.590 on Tuesday, the June contract is currently down in today’s early trade with the 200 day moving average at 2.450 remaining primary support.

If 2.450 support is broken, the near term trend will turn back down with the 38% retracement of the recent uptrend at 2.375 and the 50% retracement at 2.200 becoming the next downside support areas.

Longer term support is the 40 day moving average currently at 2.095.

If 2.450 support holds, the trend will remain up with last week’s 2.924 high being primary resistance followed by 2.975.

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

Relative Strength Index -57.94

Seasonal Prices
image 95193
Source: Bloomberg, CME
image 95194
Source: Bloomberg, CME
image 95195
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 95192
Source: Bloomberg, CME
 
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