

Weakness continued yesterday in the gas market as the pace of storage injections is nearing record speed while forecasts turned cooler for the 6-10 day period. Stocks posted a 5th straight triple digit build last week with many expecting 100+ BCF builds to continue given the lack of summer temps thus far. The last 5 injections mark the longest stretch of early season triple digit builds since 2019, which had 6 in a row. July futures settled 3.5 cents lower at $3.522.

Continuing the string of triple digit storage injections, stocks rose 101 BCF in the week ended May 23, leaving total gas in storage at 2.476 TCF. The build exceeded the average estimate of 99 BCF as well as historical comparisons. Since the early start of injection season back in March, a net 778 BCF has been added to storage. This has helped widen the 5 yr avg surplus to 93 BCF.
Early estimates for the week ending May 30 range from 89 BCF to 122 BCF with the avg estimate at 109 BCF. This would outpace both last year and the 5 yr avg comparisons of 94 BCF and 98 BCF.
Weather demand continues to lag with forecasts leaning cooler for the start of June. Yesterday’s outlook from Maxar lost 4.7 CDDs for the 6-10 day period as a cold front moves across the eastern 2/3 of the US. Temps will still rise briefly across the Upper Midwest prior to the cold front. Strong demand is expected across the West with temps averaging warmer than normal.
Total demand for today is estimated at 97.3 BCF/day, 4 BCF lower than yesterday. The decline stems from a 1.8 BCF/day drop in power burn, a 1 BCF/day drop in res/comm usage and a 0.8 BCF/day fall in LNG feedgas demand.

The market continues lower this morning given the overall bearish weather pattern and expectations for more healthy storage builds.
Technical Analysis

The new front month July 25 natural gas contract closed .035 lower on Thursday settling at 3.522 while partially closing the large gap created during the June contract expiration on Wednesday.
This gap between 3.200-3.550 is a bearish technical signal until closed with trade down to 3.200.
Thursday’s 3.437 low is near term support followed by 3.300-3.310. Longer term support is the bottom of the gap at 3.200.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 51.00






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