The Weekly Natural Gas Market Newsletter

June 6, 2022

Natural Gas News & Notes

For the week ending 6/3, the July NYMEX natural gas futures contract settled down 37.2 cents at $8.523. For the week, the contracted traded in a 94-cent range reaching a high of $9.06 and a low of $8.12. The contract closed below it's 10 day moving average price of $8.63. The failure of the contract to challenge last week's highs seen near the $9.50 level and close below its 10-day moving average could indicate that further price weakness might be expected in the coming trade week.

The EIA released its most recent natural gas storage report on Thursday. For the week ending 5/27, storage inventories rose 90 BCF to 1,902 BCF. The weekly injection was slightly higher than a market average estimate of 87 BCF. Storage inventories are now 17.3% below year ago levels and 15.1% below the previous 5- year average. Early estimates for next week's report indicate a possible injection of around 100 BCF based on supply and demand data.

Weather will play a key role in determining the near-term direction of natural gas prices as demand from the power generation sector will be closely monitored. Power demand for the week averaged almost 30 BCF/day. This was essentially flat week over week but up 2% from the same week last year. Weather forecasts for the 6-10 and 8-14 day time periods indicate some below normal temperatures in Midwest and Northeast but above normal conditions in the West and South.

With weather looking slightly bearish from a fundamental perspective and with some weaker technical indicators as well, the July contract looks poised to trade lower. The contract's 40 day moving average price of $7.80 looks like a prime target price for the contract to test soon. As recent trading has indicated, a "buy the dip" mentality is expected if the contract heads in this direction.