June 13 natural gas stair-stepped its way back to the upside, finding resistance at $4.30 before trailing today to $4.22. An upward revision to EIA's Short-term Energy Outlook for cooling degree days has injected the suggestion of increased summertime demand. But the news created a 'traders' window' through the summer as demand and heating degree days are projected to decline compared to the winter before.
That has traders taking profits while they can, expecting demand to wane late in the fall. The result has been a run to the upside and more profit taking on short coverings.
Currently (1 pm CT) the June contract is at $4.24 with volume fading. Look for $4.20 to mark support. A violation of that level carries downside potential to $4.10. If the contract makes $4.10, look for traders to jump in with both feet and drive futures back to current levels.
Spot Prices --
According to EIA, natural gas spot prices increased at most trading locations during the report week (Wednesday, May 15 – Wednesday, May 22). The Henry Hub spot price increased from $4.03 per million British thermal unit (MMBtu) last Wednesday to $4.16 per MMBtu yesterday.
The prices increased most significantly after the weekend, when they rose between 20 cents and 40 cents per MMBtu at most major trading hubs as warmer weather took hold. The Henry Hub price increased 13 cents to $4.03 per MMBtu yesterday from last Wednesday.
Total demand decreased during the report week, with increases in power burn offsetting declines in residential, commercial, and industrial consumption. Natural gas consumed for power generation increased 17.5 percent from last week, according to data from BENTEK Energy Services LLC. Power burn rose most significantly in the Midwest, Southeast, and Texas by 63 percent, 23 percent, and 30 percent, respectively.
Warmer temperatures in the eastern United States likely contributed to higher natural gas consumption for power generation in those regions.
Working natural gas in storage increased to 2,053 billion cubic feet (Bcf) as of Friday, May 17, according to EIA’s Weekly Natural Gas Storage Report (WNGSR). An implied storage injection of 89 Bcf for the week moved storage levels 680 Bcf below year-ago levels, and 84 Bcf below the 5-year average.