The injection came in below expectations and below the five-year average for the week. On any other day that would be bullish. But when the weather forecast is this soft, a slightly bullish storage number does not change the direction. The cushion heading into summer is large enough that moderate heat does not create a supply problem. Sustained heat across major demand centers is the only thing that shifts this picture.
LNG Feedgas Holds the Floor
Estimated LNG feedgas flows hit 17.8 billion cubic feet per day on Monday. Export demand is still pulling gas out of the domestic market even while weather demand is flat. That is the floor.
Globally the LNG market is tighter than the domestic numbers suggest. Damage at Qatar’s Ras Laffan facility earlier this year took a piece of the world’s largest LNG export complex offline. The Strait of Hormuz disruption is restricting energy flows to parts of Europe and Asia. Both of those create potential for increased U.S. LNG shipments if the disruptions persist.
U.S. electricity generation rose 5.2% from a year ago in the latest reporting week according to the Edison Electric Institute. Power demand is growing. That matters more later in the summer when temperatures climb but it is already adding incremental gas consumption at the utility level.
What to Watch
The 50-day moving average at $3.133 is the only level that matters today. Buyers need to hold it or the next stop is the support zone at $2.978 to $2.951. The weather forecast through June 10 is bearish for demand. Production is at record levels. Storage is comfortable. All three are working against price right now.
The longer-range models hint at heat developing after June 11. If those forecasts firm up inside the 10-day window, buyers will start positioning ahead of it. Until then the sellers have the better hand and the profit-taking from last week’s 27-cent rally is not finished.
More Information in our Economic Calendar.
