Nat gas held lower after the EIA reported a storage build 10 BCF higher than the average estimate while the 5 yr avg surplus rose for the first time since early May. Losses were extended into the close despite ongoing heat across the West that is expected to spread eastward into next week. Aug futures settled 6.1 cents lower at $2.268.
The EIA reported a larger than normal and much higher than expected injection of 65 BCF for the week ended July 5, leaving total gas in storage at 3.199 TCF. The build outpaced both the 5 yr avg and year ago builds of 57 BCF, increasing the year ago surplus to 283 BCF and the 5 yr avg surplus to 504 BCF. Demand during the reporting period was lighter due to the July 4th holiday and lower CDDs while supply levels rose slightly. Overall, the supply/demand balance loosened by 1.4 BCF/day.
Injections are expected to fall back below normal for the week ending July 12 as a 3 BCF/day increase in demand has more than offset reduced LNG feedgas and power sector demand in TX. Early estimates from Reuters point to a build of 38 BCF while Platts estimates a build of 33 BCF.
Freeport LNG began pulling in small amounts of gas on Thursday after shutting down on Sunday. Gas flowing to Freeport was on track to reach 0.1 BCF/day, up from about zero the previous 4 days. Prior to shutting down, Freeport was pulling in an average of of 1.7 BCF/day. CenterPoint Energy expects to restore service to power supply infrastructure supporting Freeport LNG by the end of the day, July 13, implying production could soon fully resume.
Early estimates for LNG feedgas this morning came in at 11.2 BCF/day, lower than yesterday’s 11.4 BCF/day, according to Platts.
Prices are searching for direction this morning as the market weighs near term heat against a rising surplus. Triple digit temps are anticipated today across large portions of the West while remnants of Beryl are expected to keep readings closer to normal across the Mid-Atlantic. Heat is forecast to expand over potions of the central and eastern US into next week.
This morning’s 6-10 day forecast from Maxar shows widespread cooler changes versus yesterday from the eastern Four Corners to the Plains, Midwest and Mid-Atlantic. The 11-15 day period is cooler from the Mid-Continent to the East with readings only a few degrees of normal. The West will remain in a hot trend with temps averaging above to much above normal.
The August 24 natural gas contract closed under an area of support on Thursday which had held the previous three sessions keeping the market in a near term bearish downtrend.
The support broken was the 50% retracement of the 2024 uptrend at 2.325 with the August contract closing Thursday at 2.268, down .061 (2.6%).
Bullish divergences continue to form on the 60-minute chart possibly suggesting a short-covering rally is near.
Former support at 2.325 is the 1st area of resistance today followed by the 10 day moving average at 2.385.
With the 50% retracement support broken on Thursday, the 61.8% retracement at 2.120 becomes the next area of support.
Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 36.76
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