

Last week’s decline came to a halt on Friday as the new spot month August contract took the lead. The rally was fueled by short covering and positioning for tightening supplies heading into mid summer. The early to mid July weather outlook also turned hotter while increases in LNG demand are looming. Aug futures settled 21.3 cents higher at $3.739. For the week, the contract was still down about 3%.

LNG feedgas demand is averaging 14.3 BCF/day this month, less than May’s average of 15 BCF/day. June’s current monthly average is higher than earlier in the month as LNG maintenance reductions are nearing the finish line. Maintenance still appears to be limiting gas deliveries to Sabine Pass, which are averaging 3.1 BCF/day. Flows there should return to more normal levels of 4.6 BCF/day over the coming weeks. Feedgas demand hit 15.7 BCF/day on Sunday and is estimated this morning at 15.2 BCF/day.
Production levels have been climbing, with volumes reaching 106.2 BCF/day this morning and weekend nominations peaking at 106.5 BCF/day. Output is likely to remain strong given the end of calendar month. Recent strength has helped lift the month to date average to 105.3 BCF/day.

The market has given back Friday’s gains and then some this morning as the extreme heat across the East has subsided, reducing near term demand. While temps will remain above normal across much of the US over the next 10 days, Weather Desk is showing normal to below normal readings across the eastern US during the 11-15 day period.
Technical Analysis

The new front month August 25 natural gas contract was well bid in Friday’s session as it gained .213 (6%) to close the day at 3.739.
For the week, the August contract was down .210 (5.3%) closing lower 4 out of the 5 trading days.
Prices are down today nearly erasing all of Friday’s gains. A double bottom at 3.400 is primary support. If broken, the bottom of the gap created last week during expiration of the July 25 contracts at 3.320 will become the next area of support.
Longer term support is last week’s 3.199 low followed by 3.000 and 2.750.
Friday’s 3.751 high is technically important as it held under former 60-minute chart trendline support, now resistance. With resistance holding, the near term trend turned back down in today’s trade.
Trend following indicators remains mixed as prices continue to trade in a sideways range.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 48.97






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