Strong upward momentum in nat gas evaporated as of midday trade yesterday but spot month gas prices still managed to hold near 21 week highs. The prompt month traded above $3 for the first time since mid Jan as weather outlooks continue to turn increasingly more supportive. Strong power burn was offset by expectations that NE gas supplies will rise in the near term as Mountain Valley Pipeline in West Virginia is starting operations today. July futures settled 1.2 cents lower at $2.906.
Maxar is projecting the next 2 weeks will yield 167 CDDs, which is not only above normal but would be a record for the period. Hot temps are expected in the coming days across the West before expanding into the South and East by the end of this week and into much of the US next week.
Power burn is coming in 2.5 BCF/day lower this morning at 36.8 BCF/day. Power burn is expected to pick back up as temps heat up, averaging 39.9 BCF/day over the next week while the 8-14 day period is expected to average 43.2 BCF/day.
A slowdown in output since the start of May remains a major catalyst for the recent run up. Production curtailments that began last month have left pushed output down to an average of just 99.5 since May 1. Month to date, output is averaging 99.3 BCF/day, down 3.4 BCF/day from June’23. Production levels year to date are running 0.4 BCF/day below last year at 101.2 BCF/day. Output is estimated this morning at 97.8 BCF/day, 1.8 BCF/day lower than yesterday.
The rally recovered overnight with the spot month currently up 14 cents. This morning’s outlook trended hotter from the Great Lakes to the NE and cooler across the interior West as well as from the SE to the Mid-Atlantic.
The July 24 natural gas contract rallied up to a 3.096 morning high on Monday before sellers came in dropping the contract to a 2.862 mid-day low before closing the session at 2.906, down .012.
Volume came in at a 4-month high of 269,719 contracts which could indicate a near term top is forming.
The July contract did close above 7-month trend line support at 2.900 which was broken as resistance last Friday.
An overnight rally higher topped at 3.083, holding under Monday’s high as resistance, and possibly forming a double top reversal on the 60-minute chart.
Bearish divergences have formed on the 60-minute chart trend following oscillators which is a negative factor heading into today’s trade.
2.880-2.900 is near term trend line support followed by the 10 day moving average at 2.740. Longer term 200 day moving average support is at 2.460 on the daily continuation chart.
3.080-3.090 is near term resistance followed by 3.165, the final 88% retracement of the 2024 downtrend.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -68.46
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