

Bullish sentiment surrounding faltering production levels and rebounding demand at Freeport continued to propel nat gas prices in yesterday’s trade. Despite recent strength, the massive oversupply along with mild weather expectations for next week could dry up further upward momentum. Early gains in the June contract were wiped out by Wednesday afternoon, leaving the spot month to settle 2 cents lower on the day at $2.187.

Refinitiv is projecting a build of 85 BCF for the week ended May 3 which would come in higher than last year’s build of 71 BCF and the 5 yr avg build of 81 BCF. If correct, stocks would increase to 2.569 TCF, 21% above last year and 34% above the 5 yr avg.
Early estimates for next week’s report suggest a build of 80 BCF which would fall short of last year’s 93 BCF and the 5 yr avg injection of 90 BCF.
US demand is expected to sink to seasonal lows as we head into mid May. Over the next week, res/comm, power and industrial demand are projected to fall by a combined 5 to 6 BCF/day, hitting the lowest level since last spring at about 62 BCF/day. LNG feedgas demand also remains well below capacity, coming in yesterday at 11.8 BCF/day. Feedgas demand this morning is higher, coming in at 12.8 BCF/day.

Weather forecasts suggest comfortable conditions developing this weekend into next week for regions east of the Rockies. Heat should begin to build during late May/early June across the South, boosting cooling demand while leaving less supply for storage.
Prices are trading higher this morning as reports show nat gas flows into Freeport are on track to hit a 16 week high today of 1.7 BCF/day. This likely means all 3 trains were operating, albeit at slow levels.

The May 24 natural gas contract rallied up to a new 2024 spot contract high at 2.274 in Wednesday’s session but pulled back into the close finishing the day at 2.187, down .020.
60-minute chart trend following oscillators which were overbought in Wednesday’s early trade are now in the neutral area heading into today’s weekly storage report.
2.274 is near term resistance followed by the mid-January 2.310 low. Longer term resistance is the top of an open gap on the daily continuation chart created in late-January at 2.400-2.410 followed closely by the 200 day moving average currently at 2.460.
2.130-2.140 is weekly low support followed by the 10 day moving average currently at 2.050. 10 and 40 day moving average alignment turned bullish in late-April.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -66.92






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