Nat gas prices ended Thursday’s session stronger following a seasonally weak injection, softer production levels and forecasts for rising temperatures later this month. The June contract settled 10.3 cents higher at $2.035.Declining production levels, expectations for LNG feedgas demand recovery and the likelihood of a hot summer all point to seasonal strength in the coming weeks.
Last week’s injection came in larger than expected but was still smaller than both last year and the 5 yr avg. For the week ended April 26, stocks rose 59 BCF leaving total gas in storage at 2.484 TCF. The year over year surplus now stands at 436 BCF while the 5 yr avg surplus is now 642 BCF.
A looser supply/demand balance this week suggests a more robust build for the week ending May 3. Total demand over the past 6 days is down 6 BCF/day, due mostly to a drop in res/comm demand while supply has tightened about 300 MMcf/day. Platts is calling for a build of 78 BCF with Refinitiv’s estimate coming in at 89 BCF. The 5 yr avg build for the week is 81 BCF.
Feedgas demand is ticking higher as volumes to Freeport appear to be ramping up. Freeport took in nearly 1 million Dth/day yesterday as a fully loaded vessel left the export facility for the first time in a week. This suggests operations on Train 3 are stabilizing. Trains 1 and 2 are expected to return to service this month.
This morning’s forecast trends notably cooler in TX and the South while much warmer along the West Coast. Above normal temps are still expected across the Midwest, South and Mid-Atlantic. The 11-15 day period trends warmer this morning in the West and cooler across the East.
Output levels have remained below 100 BCF/day for the past few days, coming in this morning at 99.9 BCF/day. This is an improvement from Wednesday’s 98.4 BCF/day. Output is projected to remain just under 100 BCF/day for the next 2 weeks.
Prices this morning are trading mixed.
After holding above 1.900-1.910 support on Wednesday, the June 24 natural gas contract trended back higher in yesterday’s trade gaining .103 (5.3%) to settle at 2.035.
Primary resistance is at 2.060-2.070 today (2.067 current daily high). A breakout above this resistance at 2.092 weekly high would be a bullish technical signal turning the mid-December 2023 low at 2.235 into the next upside resistance.
If 2.060-2.070 resistance holds, the 1.907 contract low for the June contract reached earlier this week will become the initial downside objective.
If 1.900-1.910 support is broken, the bottom of the open gap created during the May 24 contract expiration at the lower-1.600 area will become the next downside objective.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -51.05
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