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Daily Natural Gas Market Update 7-8-24

By: Heather Wine, Senior Risk Manager - Energy

Daily Natural Gas Market Update
 
Heather Wine
Senior Risk Manager | (312) 373-8250StoneX Financial Inc. - FCM Division Heather.Wine@stonex.com
StoneX Value Matrix
image-20240708090309-1
Source: StoneX Value Matrix (2), Bloomberg
StoneX Market Indicator
image-20240708090349-2
Source:  StoneX Market Indicator (1), Bloomberg
Fundamentals & Weather

Nat gas prices dropped sharply last week as production levels recovered, gas supplies remained in abundance and  weather related demand eased. Spot month gas prices fell more than 4% on Friday resulting in a near 11% decline on the week, the largest weekly loss since mid February.  Aug futures settled Friday’s trade down 9.5 cents at $2.319.

 

image 97073
Source: Bloomberg, CME

Flows to Freeport LNG fell close to zero on Sunday as Hurricane Beryl neared the TX coast.  Amounts are expected to remain near zero today with operations not resuming until it is deemed safe.   Prior to Beryl approaching, feedgas demand was averaging about 1.7 BCF/day since June 30.  With Freeport ramping down production, feedgas demand was set to fall to an 11 week low today of 11 BCF/day. 

image 97074
Source: NOAA

 

While the West is seeing record heat, a large portion of the central US is beginning to see temps cool slightly, causing a decline in res/comm usage of 0.9 BCF today while power burn is coming in 0.4 BCF lower on the day.   Total demand is projected at 100.7 BCF/day.  

With hotter weather forecast for next week, gas demand is projected to rise back to an average of 102.7 BCF/day during the 8-14 day period.  The 3 to 4 week outlook shows above normal temps for the entire country with the strongest anomalies in the NE and interior NW.  

​​image 97075
Source: NOAA

Production has recovered, hitting 102.4 BCF/day over the weekend. Output this morning is coming in even stronger, at 102.6 BCF/day. 

Prices are currently trading higher as weather forecasts have turned hotter while LNG exports should recover quickly from Hurricane Beryl.   

Technical Analysis 
 
image-20240708090509-3
Source: Bloomberg, CME

The spot natural gas contract, currently July 24, has closed down 4 consecutive weeks settling Friday at 2.319.

Over this 4-week span, the spot contract has retraced 50% of the April-June uptrend after reaching the 50% retracement support on Friday at 2.320.

Daily chart trend following oscillators remain in a bearish alignment but bullish divergences are appearing on the 60-minute chart oscillators. 

The 200 day moving average broken as support last week is now resistance at 2.460 followed by the 10 day average at 2.545.

If selling continues, the next longer term support is the 61.8% retracement of the 2024 uptrend at 2.120.

Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bearish

Relative Strength Index - 38.57

image 97078
Source: Bloomberg, CME
image 97076
Source: Bloomberg, CME
image 97077
Source: Bloomberg, CME
image 96675
Source: Bloomberg, CME, StoneX Value Matrix (2)
image 96676
Source: Bloomberg, CME, StoneX Value Matrix (2)
Forward Curve Pricing
image 97079
Source: Bloomberg, CME
 
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