Aug nat gas lacked direction on Wednesday but ultimately settled lower as storage data failed to bring upward momentum. EIA data was in line with market expectations and included a bearish revision to the previous week’s injection. Aug futures settled 1.7 cents lower at $2.418.
The EIA reported an 8th consecutive below normal injection last week, however storage levels still remain oversupplied. Stocks for the week ended June 28 rose by 32 BCF, which was right in line with estimates but well below last year’s 76 BCF injection and the 5 yr avg build of 69 BCF. The EIA also revised higher its estimate for the week ended June 21by 5 BCF. Total gas in storage now stands at 3.134 TCF, which is 496 BCF, or 19%, above the 5 yr avg and 275 BCF, or 10%, above last year.
For the week ending July 5, estimates suggest a build of 51 BCF which would narrow the surplus yet again as it compares to the 5 yr avg build of 57 BCF.
LNG feedgas demand has picked up the past 2 days, coming in this morning at 12.9 BCF/day. This is up from early week levels of 12 BCF/day. Flows to Sabine Pass have increased by about 0.6 BCF/day to 4.3 BCF/day while Corpus Christi is still being impacted by maintenance.
Production in the Appalachian basin has hit a 4 month high of 35 BCF/day with the help of increased flows on the Mountain Valley Pipeline. Total output this morning is estimated at 102.2 BCF/day.
Hurricane Beryl has been downgraded to a Category 2 and should make landfall in the northern Yucatan this morning. Beryl is expected to enter the western GOM as a tropical storm and should make landfall in southern TX on Monday, bringing cooler temps to that region.
Prices remain under pressure this morning as temps are expected to cool down across the Central US over the next several days.
Holiday trade is the theme in the natural gas market as the prompt-month August futures contract settled at $2.418 on Wednesday July 3rd. It was down marginally, .017 cents from Tuesday’s close.
With the July4th holiday on Thursday, many traders are taking the Friday session off, potentially adding increased volatility to end the week.
The market on a continuation basis took out the May 29th low at $2.417 to start the week as well as the 200-day moving average at $2.465.
August futures also dipped down to $2.335, breaking below the May 1st low at $2.380 and the April 16th low at $2.360. Key will be if the market can close back unchanged or higher on whether this is a false breakout to the downside. If the slide continues, the 50% retracement of the 2024 uptrend at $2.320 will become the next area of support.
Trend following oscillators on the 60-minute chart continue to show bullish divergences.
Resistance is at the 10 and 40-day moving averages which have converged between $2.640 - $2.620.
Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish
Relative Strength Index - 40.77
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