

Spot month gas prices settled higher for a 3rd straight session Wednesday as forecasts continued to show hotter conditions for the last week of July. Prices dipped lower midday after reports showed a decline in feedgas nominations at 2 US LNG facilities. Losses dried up by the close leaving Aug futures up 2.8 cents on the day to settle at $3.551.

Growth in the surplus is expected to resume following the previous week’s lower than normal build. The EIA is projected to report an injection of 46 BCF for the week ended July 11, which compares to last year’s build of 18 BCF and the 5 yr avg build of 41 BCF. Today’s report will take into account the July 4th weekend and lower wind generation. A hotter pattern for late July into August is likely to reduce storage builds over the next 2 weeks although current estimates are still higher than historical comparisons.
LNG feedgas demand dropped to 15.2 BCF/day yesterday following reports of afternoon outages. A compressor system issue at Freeport LNG caused an outage and extended restart of Train 2 while flows to Southern LNG’s facility on Elba Island fell to zero for the first time in 4 years due to planned maintenance. Platts is showing LNG feedgas demand at 15.8 BCF/day as of this morning.

Supportive technicals and building heat later this month are helping prices tick higher this morning. The spot month is currently trading about 5 cents higher.
Technical Analysis

The spot August 25 natural gas contract has closed higher every day this week gaining another .028 on Wednesday to settle at 3.551.
10, 40 and 200 day moving average resistance on the daily continuation chart was broken this week turning the near term trend back higher following a 3-week correction.
Volume, however, has been unimpressive declining on each day the market has trended higher likely indicating short-covering behind much of the move.
The trend could continue higher near term with the 50% retracement of the June-July downtrend at 3.650 being the next upside resistance above Wednesday’s 3.598 high.
Bearish divergences have been forming on the 60-minute chart which is not a longer term bullish pattern.
10, 40 and 200 day moving average support is between 3.420-3.520 today. A close back under 3.420 will renew the bearish downtrend turning last week’s 3.149 low into the next longer term support.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 53.69






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