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By: Heather Wine, Senior Risk Manager - Energy
4-Year price deciles
Spot month gas prices settled a touch higher to close out the shortened week. The lingering storage deficit lent support heading into Friday’s trade as did forecasts for lower output and higher LNG exports. Spot month prices ended Friday’s session 3.8 cents higher at $8.523. Despite the small gain, the contract was still down 2% for the week.
Over the last week, dry output fell about 0.1 BCF/day with the most significant decline in the South Central region. Nat gas drilling rigs were unchanged on the week at 151 rigs.
As for demand, res/comm usage rose by 1.6 BCF/day with increases seen across all regions except the Pacific while industrial demand notched a 0.3 BCF/day gain. These gains were offset by a 2.5 BCF/day drop in power demand.
Near term fundamentals remain bullish with the latest 8-14 day outlook showing above normal readings spanning from the entire southern US up into the Midwest, Rockies and Midcon regions. The south central US, particularly TX, has the strongest probability for warmth while below normal readings are confined to the NW. The coming change to hotter weather will boost cooling demand and keep stocks well below normal.
The July 22 natural gas contract traded in a fairly wide .940 range last week trade with three sell off attempts all quickly bid back higher.
For the holiday-shortened week, the contract lost .204 (2.3%) closing Friday at 8.523.
The July contract is up over 5% in to start the new week of trade as it tests 9.057 weekly high resistance.
A breakout above last week’s high will turn the 9.447 contract high into the next area of resistance.
Longer term monthly high resistance is 10.200 from December 2000.
10 day moving average support is at 8.710 today (8.732 current overnight low) followed by an open gap created overnight between 8.540-8.710. This gap will be closed at some point.
Technical Indicators:
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index – Bearish
Relative Strength Index - 61.04
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