Early session gains were erased yesterday after storage data proved less supportive than anticipated. The July contract ultimately settled higher on expectations for hotter temps to emerge later this month across the East while output continued lower. The July contract closed 6.4 cents higher at $2.821.
Last week’s storage injection outpaced expectations by 8 BCF but was still lower than historical comparisons. The EIA reported a build of 98 BCF, leaving total gas in storage at 2.893 TCF which is 581 BCF above the 5 yr avg and 373 BCF above last year. Over the past 6 weeks, the 5 yr avg surplus has narrowed by 74 BCF amid strong gas fired power demand and a steady increase in LNG feedgas.
Analysts expect a further narrowing of the surplus over the balance of June as temps heat up and LNG terminal maintenance concludes. Injection estimates for the week in progress range from 68 to 78 BCF, which compares to the 5 yr avg of 89 BCF.
Prices are pushing higher this morning as forecasts show expanding coverage of above normal temps during the 6-10 day period. According to Maxar, above to much above normal temps will favor the Interior West early on before quickly moving eastward into the Midwest and East. Their 11-15 day forecast maintains projections for a hotter than normal pattern across much of the US.
Power burn is now expected to move sharply higher over the next 2 weeks, averaging more than 40 BCF/day by mid month. This compares to the average of 37 BCF/day for the past week.
Following the bankruptcy of Golden Pass’s lead contractor, Zachry, Golden Pass LNG says it will now enter service sometime during the first half of 2025. Golden Pass’s 2 remaining contractors continue to work on the project which is currently 75% complete.
The July 24 natural gas contract tacked on an additional .064 in Thursday’s session closing at 2.821 as it tests 7-month trend line resistance in today’s early trade.
Volume on Thursday was at a 4-day low but still healthy at 194,237 contracts.
Trend line resistance which begins at the Oct. 31, 2023 high of 3.630 on the daily continuation chart has been tested four times over the past 7 months including yesterday.
A breakout above this trend line at the 2.880-2.900 level would be another bullish technical signal turning the January 2024 high at 3.390 into the next area of resistance.
If trend line resistance is not broken, 10 day moving average support is at 2.650 today with longer term 200 day moving average support at 2.450.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -63.94
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