Reduced output and expectations for a below normal injection helped push the nat gas market higher for a 2nd straight session yesterday. Sep futures settled 10.2 cents higher at $2.111.
Strong weather related demand last week across the Central and East are expected to result in a lower than normal build for the week ended Aug 2. Reuters has adjusted their injection estimate down to 26 BCF, which compares to last year’s build of 25 BCF and the 5 yr avg build of 38 BCF. Heat across the Midcon, TX, SE and NE spurred a 4 BCF/day rise in demand last week led mostly by strong gas fired power burn.
An even smaller build is predicted for the week in progress with estimates coming in near 18 BCF, which falls short of both last year’s build of 33 BCF and the 5 yr avg build of 43 BCF.
Gas fired power generation has been strong this summer with June and July both outpacing last summer’s levels. Power burn this month remains elevated, reaching a record 54.7 BCF/day on Aug 1. Power burn has dropped slightly this week, coming in this morning at 47.1 BCF/day. Month to date, power burn is averaging 50.9 BCF/day, 4 BCF/day higher than last year.
Production levels have fallen below 102 BCF/day during the latter half of this week after reaching the 103 BCF/day level this past weekend. Major producers are preparing to instill production curtailments over the coming months after prices have dropped 40% over the last 2 months.
Temps across the Central, East and Northern US are expected to average cooler than normal over the next 5 days while readings remain warm across the West. Hotter conditions will return for much of the US during the 11-15 day period.
Prices are under are pressure this morning with the Sep contract currently down about 8 cents on mixed weather outlooks while the market awaits storage data. A light injection could result in short covering.
The September 24 natural gas contract closed up for a 2nd day on Wednesday gaining .102 (5%) to settle the day at 2.112.
Daily volume came in at a near two month high of 226,781 contracts on a combination of short covering and technical buying with the breakout above the lower-2.000 area.
The September contract closed above the 10 day moving average for only the 3rd time since the June high was set. The last two times 10 day moving average resistance was broken, prices reversed back lower the following day.
In today’s early trade, the September contract is down .050 after holding under Wednesday’s high as resistance.
10 day moving average daily continuation chart support is at 2.015 followed by the 1.882 weekly low support extending down to 1.850.
Wednesday’s 2.120 high is near term resistance followed closely by last week’s 2.149 high. Long term resistance is the 2.270 high set two weeks ago.
Moving Average Alignment – Neutral- Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -44.72
This material should be construed as the solicitation of an account, order, and/or services provided by the FCM Division of StoneX Financial Inc. (“SFI”) (NFA ID: 0476094) or StoneX Markets LLC (“SXM”) (NFA ID: 0449652) and represents the opinions and viewpoints of the author. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Additionally, this material should not be construed as research material. The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand the risks prior to trading. Past results are not necessarily indicative of future results.
All references to and discussion of OTC products or swaps are made solely on behalf of SXM. All references to futures and options on futures trading are made solely on behalf of SFI. SXM products are intended to be traded only by individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM.
SFI and SXM are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact designated personnel from SFI or SXM for specific trading advice to meet your trading preferences.
(1) The StoneX Market Indicator provides an overall view of market sentiment for a commodity based on the quantification of fundamental, technical and historical market data related to that commodity. The StoneX Market Indicator History graphically represents each day’s actual very bearish to very bullish signal. This history contains the sum of all factors, excluding weather forecasts.
(2) The StoneX Value Matrix provides a measure of historical value by analyzing historical price data distributed into 10 deciles. The prices are adjusted for inflation using the Producer Price Index (PPI) published by the U.S. Bureau of Labor Statistics.
Reproduction or use in any format without authorization is forbidden. © Copyright 2024. All rights reserved.
