Natural gas futures were trading close to even early Tuesday as the latest weather data offered mixed trends on the amount of heat expected to arrive later this month. The July Nymex contract was down 0.9 cents to $1.780/MMBtu at around 8:45 a.m. ET.
The European weather model trended cooler overnight, while the American Global Forecast System trended hotter, bringing the models into better agreement for the period from June 18-23, according to NatGasWeather.
“If the European model hadn’t backed off on the amount of heat during this important period, it would have been viewed as more strongly bullish,” the forecaster said. However, with the European model giving back “numerous” cooling degree days “it’s difficult to know if the pattern is hot enough to satisfy or not. Likely so, but bulls would prefer there being little doubt.”
Meanwhile, looking ahead to Thursday’s Energy Information Administration storage report, Energy Aspects issued a preliminary estimate for a 90 Bcf injection for the week ending June 5.
The firm estimated a 0.6 Bcf/d week/week production increase for the period, offset by a 2.5 Bcf/d gain in power burns. Its estimates showed liquefied natural gas (LNG) feed gas flows dropped close to 1 Bcf/d week/week.
“Our weekly models are currently pointing to a June storage injection on the order of 360-375 Bcf/d,” Energy Aspects said. Although last week’s EIA print “may be the last triple-digit injection seen until the fall shoulder season, the market is clearly on a path for bloated inventories come end-October.
“Whether that figure ends up breaching the psychological 4.0 Tcf threshold will be dependent on the ongoing risks in the global LNG market and how swiftly and to what degree cost-competitive crude shut-ins return in the coming weeks, propping up associated production.”
From a technical perspective, ICAP Technical Analysis analyst Brian LaRose pegged resistance for the July contract at $1.889 and support at $1.746.
“Clear $1.889 and the door will be open for a push to $1.945-$1.974-$1.980, even $2.041-2.048-2.053 from here,” LaRose said in a note to clients. “Take out $1.746 instead and we will be looking to probe $1.710, then $1.659. Still have little reason to favor one scenario over the other at this time, so maintaining our neutral stance for now.”
July crude oil futures were off 40 cents to $37.79/bbl at around 8:45 a.m. ET, while July RBOB gasoline was trading fractionally lower at $1.1924/gal.
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