Entelrgy

Natural gas prices jump 15 cents to $1.698/mmBtu as the latest short-term temperature forecasts point to some hotter weather that could lift demand.

Analysts say market sentiment remains bearish despite today’s uptick after prices fell Thursday to a 25-year-low $1.4820/mmBtu.

Weak demand largely due to coronavirus is weighing heavily on the market as industrial gas demand declines,

and would-be foreign buyers of US LNG cancel planned purchases.

That’s causing storage to rise faster than expected, with total inventories now at 3.012T cubic feet, an 18% surplus to the five-year average.

Natural gas prices reduce declines, down 0.5% at $1.63/mmBtu after EIA says gas-in-storage rose by 85B cubic feet last week,

which precisely matches the average of forecasts by analysts in a WSJ survey. The number is well below last year’s 111-bcf injection,

and also slightly below the five-year-average rise of 87 bcf, and analysts say that’s because hotter-than-normal

temperatures last week in places like Texas gave a pre-summer boost to demand.

Total storage now stands at 2.892T cubic feet, which is a 17% surplus to the five-year-average and compares to a 19% surplus two weeks ago

Storage Summary

Working gas in storage was 2,892 Bcf as of Friday, June 12, 2020, according to EIA estimates. This represents a net increase of 85 Bcf from the previous week.

Stocks were 722 Bcf higher than last year at this time and 419 Bcf above the five-year average of 2,473 Bcf. At 2,892 Bcf, total working gas is within the five-year historical range.

For information on sampling error in this report, see Estimated Measures of Sampling Variability table below.

Natural gas prices are moving lower in NY, down 3.3 cents at $1.697/mmBtu in conjunction with broader declines in crude oil and US equity futures amid fears of a resurgence of the coronavirus in the US and China.

Natural gas investors are tracking weather patterns to see whether late June and into July may provide hotter-than-normal temperatures that could boost gas-fired electricity grid demand.

The market has overlooked the moderately bullish weekly EIA storage report late last week that showed a slightly-below-normal injection of 93B cubic feet,

which helped bring the storage surplus down to 18% above the average vs 19% the previous week.

Natural gas prices decline 7 cents to $1.78/mmBtu as investors worry mostly-mild spring weather and coronavirus-related factory shutdowns will keep demand muted.

“This market has been looking for some bullish assistance from the weather factor and although weekend updates are still favoring above normal trends across most of the US,

deviations from normal don’t appear sufficient to spur much buying interest,” say analysts at Ritterbusch & Associates.

The analysts say prices could find some support later in the week if an EIA storage report turns out bullish,

but they say sustained price-gains probably won’t happen unless the upcoming summer brings hotter-than-normal temperatures that could support electricity grid demand for cooling.

Natural Gas Erases Gains, Falls 5 cents to $1.77 Amid Broader Declines in Stock Markets and Oil

Natural gas prices dropped nearly 3% on Friday as inventories built more than expected. Strong production despite continued declines in rig count,

has kept natural gas prices on their heels. The weather is expected to remain warmer than normal for most of the United States which should increase cooling demand.

Softer than expected Durable goods order likely reduced natural gas demand. Orders for durable goods, plunged 17.2% in April after dropping 16.6% in March.

Technical Analysis

Natural gas prices dropped on Thursday declining nearly 3% but bouncing near support which is an upward sloping trend line that comes in near 1.82.

A close below this level would likely see a decline to the June contract lows at 1.60. Resistance on natural gas is seen near the 10-day moving average of 1.89.

The 10-day moving average recently crossed below the 50-day moving average which means that a short term downtrend is now in place.

Short term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading of the fast stochastic is 5, well below the oversold trigger level of 20 which could foreshadow a correction.

Natural gas prices decline 2 cents to $1.77/mmBtu, dragged lower by a fall in oil prices and as investors shift their bets into next month’s contract,

since the June delivery contract expires this afternoon. Gas prices have been relatively range-bound in May,

down 8% from the beginning of the month amid continued uncertainty over just how much of an impact coronavirus is having in terms of both supply and demand.

The drop in natural gas demand due to lockdowns hasn’t been extreme compared to crude oil,

but gas production doesn’t appear to be falling significantly, either.

Analysts say mild spring weather will weigh on prices in the absence of other market-moving news.

Natural gas prices rise further, up 4 cents  at $1.86/mmBtu after hitting a nearly two-week-high on Tuesday,

as risk appetite improves across much of the energy/commodity space due largely to a better-than-expected rebound in demand as coronavirus lockdowns are lifted.

“The gas trade has put in a good performance on the upside during the past couple of sessions as the gas curve has strengthened further,” say analysts at Ritterbusch & Associates.

“The fact that the market continues to hang out near 10-day highs suggests some upside follow through in today’s trade and

possibly tomorrow if the weekly storage data offers a smaller seasonal injection than generally expected.”