

Weakness proceeded further in yesterday’s trade. Prices remained relatively stable following storage data that showed a 5th straight lower than normal injection. Pressure continued as the market is anticipating an increase in supply from producers resuming curtailed output. July futures settled 9.4 cents lower at $2.572.

Storage levels rose by 84 BCF last week which was about in line with estimates but supportive when compared to the year ago build of 106 BCF and the 5 yr avg build of 104 BCF. Total gas in storage now stands at 2.795 TCF, 586 BCF above the 5 yr avg and 380 BCF higher than last year.
For the week in progress, Platts is projecting another below normal build in the 84-99 BCF range. This compares to last year’s build of 105 BCF and the 5 yr avg build of 103 BCF. If production does turn higher, it will help mitigate lower injections moving forward.
Prices fell further this morning as the market priced in the prospect of higher gas output over the coming weeks. The more than 50% spike in prices this month prompting drillers to start producing more gas with the Appalachian region seeing the strongest recovery.

The spot month is currently trading higher on the day as demand is being supported by increasing feedgas volumes. Estimates are coming in this morning at 13.7 BCF/day, up 0.2 BCF/day from yesterday. Platts is forecasting LNG feedgas volumes will average 13.6 BCF/day over the next 2 weeks.
Weather will become more of a driving factor as temps turn hotter. Widespread warmth is expected over the West and South during the next 2 weeks. The Midwest starts the 6-10 day period off on the hot side before trending cooler into the 11-15 day period.

The new front month July 24 natural gas contract lost .094 (3.5%) on Thursday closing at 2.572 and traded down to a 2.518 overnight low overnight.
The open gap on the daily continuation chart created during expiration of the June 24 contract on Wednesday has now been completely closed.
The next support is the 200 day moving average at 2.450 followed by the 38.1% retracement of the April-May uptrend at 2.375.
Current weakness is viewed as a downside correction within a greater uptrend. Once support is found, a rally back higher is expected.
10 day moving average resistance is at 2.625 today followed by 2.682 weekly high resistance. Longer term resistance is last week’s 2.924 high.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index -57.88






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