With the market still pricing in the balance impacts of a prolonged outage at the Freeport liquefied natural gas (LNG) terminal, traders shrugged off warmer forecast trends to send futures lower in early trading Wednesday.
The July Nymex contract was off 17.3 cents to $6.635/MMBtu as of around 8:55 a.m. ET.
Both the American and European weather models added to cooling degree day expectations overnight, according to NatGasWeather.
“After steady cooler trends the past several days, the overnight data trended a little hotter,” the firm said. Hotter trends were during the July 1-7 time frame, when “strong national demand returns as the hot upper ridge re-strengthens and expands north and eastward with highs of 90s gaining territory.”
Overall, the pattern as of early Wednesday appeared bullish over the next five days, neutral for days six through nine of the outlook period, then “back to the bullish side for days 10-15,” NatGasWeather added.
The July contract bounced off of the $6.554 low in Tuesday’s trading, which EBW Analytics Group pegged as a key technical level.
Recent price action “could open the door to further selling pressure and another leg lower for the front month ahead of contract expiration early next week,” EBW senior analyst Eli Rubin said.
In terms of fundamentals, LNG feed gas demand was “slumping to under 10.4 Bcf/d” in the latest estimates early Wednesday, representing a four-month low, Rubin said. This comes as domestic dry gas production “may be on the verge of increasing.
“We favor modest further declines and another retest of support near term — particularly with another strong selloff in the global oil markets early this morning — as Nymex natural gas seeks to reestablish a firmer bottom over the next seven to 10 days,” the analyst added.
Technically speaking, it will be important to monitor whether bulls can “engineer a reversal” off of the 100-day moving average, according to ICAP Technical Analysis.
“The 100-day moving average currently sits down at $6.365,” ICAP analyst Brian LaRose told clients ahead of Wednesday’s session. If bulls can reverse prices off of this level, “we could be looking at bottoming action. If they can not, we lower the bar.”
LaRose pegged the next key technical targets to the downside in this case at $6.087-5.877, $5.575-5.548 and $5.324.
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |