Futures Pricing --
August 13 natural gas opened today at $3.74 and slipped to $3.58 and later, $3.56 before retracing to end the day down 15 cents all told at $3.59. The sharp falloff is due to the market's micro-management of this contract and volume rushed to a daytime high near 8,000 at the drop.
Natural gas futures continue to be slave to short positions. Look for volume to carry the keys to this market. Once traders believe a low is in place, they will re-enter and create profits on the ensuing uptrend.
Strong resistance is now at the $3.74 level. A violation of that level would signal upside potential to $3.91. Bears' next target is a break below $3.56, but consumption increased this week and may limit downside action as the nation reaches for the thermostat, placing pressure on the national supply.
Spot Prices --
Natural gas prices fell over the report week at most locations with the exception of price increases in the Northeast. The Henry Hub spot price decreased from $3.93 per MMBtu last Wednesday to $3.72 per MMBtu yesterday.
With warmer-than-normal temperatures arriving on Monday, natural gas prices in the Northeast increased between 10% and 20%. Since Monday, the temperature in Boston has been around 10 degrees Fahrenheit above normal.
Propane, butane, and isobutane spot prices decreased by around 6%. The natural gasoline spot price was down slightly for the week, while the ethane spot price remained unchanged.
Total consumption increased week-on-week with large gains in power demand. According to Bentek Energy Services estimates, total natural gas consumption in the United States increased by 3.0%, driven by an 11.1% increase in the power sector.
Warmer temperatures across most of the country, and the corresponding increase in air conditioning load, likely contributed to the demand increases
Working natural gas in storage increased to 2,533 Bcf as of Friday, June 21, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report.
A net storage injection of 95 Bcf for the week resulted in storage levels 17.1% below year-ago levels, and 1.2% below the 5-year average.
Seasonal temperatures during the storage report week supported this week's net injection. Temperatures in the Lower 48 states were 0.3 degrees warmer than the 30-year normal temperature and 0.6 degrees cooler than the same period last year, and averaged 71.4 degrees for the week, compared to 72.0 degrees last year and the 30-year normal of 71.1 degrees.