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James Hyerczyk
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Natural Gas

Natural gas futures overcame early session weakness to close higher for the session on Friday in a delayed reaction to Thursday’s encouraging government storage report, steadily strong export activity and the anticipation of firmer cooling demand over the near-term.

On Friday, June natural gas futures settled at $2.958, up 0.30 or 1.02%.

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Continued Robust Export Activity

Liquefied natural gas (LNG) levels topped 11.6 Bcf on Friday, according to NGI data. LNG feed gas volumes have hovered near or above the 11 Bcf threshold and within striking distance of record levels for several weeks, according to Natural Gas Intelligence (NGI).

Pipeline exports to Mexico also are solid, regularly approaching 7 Bcf/d, helping to bolster the demand side of the equation and support prices, NGI said.

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Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 60 billion cubic feet (Bcf) for the week ended April 30.

Total stocks now stand at 1.958 trillion cubic feet (Tcf), down 345 Bcf from a year ago and 61 Bcf below the five-year average, the government said.

Although the initial reaction to the EIA report was to the downside, the storage numbers actually support higher prices later this summer, but the timing may be off because weather conditions are not quite bullish yet for this time of year.

Short-Term Weather Outlook

According to NatGasWeather for the week-ending May 7 to May 13, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Midwest and Northeast through next week with highs of 50s and 60s and lows of 30s and 40s.

Cooling has also arrived into the South/Southeast with highs of 70s to low 80s for lighter demand, although warming back into the 80s and 90s from Texas to the Southeast late this weekend.

The Northwest will experience showers and cooling with highs of 50s and 60s but very warm over the Southwest with highs of 80s to 90s. Overall, long for moderate demand through mid-next week.

Daily Forecast

The main trend is up according to the daily swing chart. A trade through $3.001 will signal a resumption of the uptrend. The main trend will change to down on a move through $2.735.

The first support comes in at $2.868. This is followed by $2.837 and $2.802.

At this time, it appears that traders are having a hard time buying strength and playing for a breakout to the upside. If they had a catalyst, perhaps they would be more aggressive.

If they’re not buying strength then they may be looking for a pullback into support which comes in at $2.868 to $2.802.

For a look at all of today’s economic events, check out our economic calendar.
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