This morning's low print 1.846 undercut the 1.878 that defined the jumping off point for last Sunday's gap up and did so without undercutting the series of higher lows which indicate buyers willingness to bid up which has defined the trend since mid-March. Daily chart via FinViz:
Enough with lines on charts, from the Energy Information Administration:
.....Overview:.....MUCH MORE
(For the week ending Wednesday, May 7, 2020)
- Natural gas spot price movements were mixed this report week (Wednesday, April 29, to Wednesday, May 6). The Henry Hub spot price rose from $1.70 per million British thermal units (MMBtu) last Wednesday to $1.88/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the June 2020 contract increased 8¢, from $1.869/MMBtu last Wednesday to $1.944/MMBtu yesterday. The price of the 12-month strip averaging June 2020 through May 2021 futures contracts climbed 2¢/MMBtu to $2.557/MMBtu.
- The net injections to working gas totaled 109 billion cubic feet (Bcf) for the week ending May 1. Working natural gas stocks totaled 2,319 Bcf, which is 52% more than the year-ago level and 21% more than the five-year (2015–19) average for this week.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 25¢/MMBtu, averaging $3.35/MMBtu for the week ending May 6. The prices of butane and isobutane fell by 3% and 6%, respectively. The price of propane remained flat week over week. High reliance on ethane as petrochemical feedstock resulted in ethane prices rising 20%. Natural gasoline prices rose by 31%.
- According to Baker Hughes, for the week ending Tuesday, April 28, the natural gas rig count decreased by 4 to 81. The number of oil-directed rigs fell by 53 to 325. The total rig count decreased by 57, and it now stands at 408.
Prices/Supply/Demand:
*****.....Supply falls. According to data from IHS Markit, the average total supply of natural gas fell by 1.4% compared with the previous report week. Dry natural gas production decreased by 1.3% compared with the previous report week, led by declines in the Appalachia Basin. Average net imports from Canada decreased by 4.6% from last week. See this week’s In the News article for further discussion of declining imports from Western Canada.
Demand falls, driven by decreased demand for heating and cooling in buildings. Total U.S. consumption of natural gas fell by 15.3% compared with the previous report week, according to data from IHS Markit. In the residential and commercial sectors, consumption declined by 38.2% driven by low consumption during the weekend. Natural gas consumed for power generation climbed by 0.5% week over week. Industrial sector consumption decreased by 11.8% week over week. Natural gas exports to Mexico decreased 5.3%.
U.S. LNG exports increase week over week. Fifteen liquefied natural gas (LNG) vessels (six from Sabine Pass, three each from Cameron and Corpus Christi, two from Freeport, and one from Cove Point) with a combined LNG-carrying capacity of 54 Bcf departed the United States between April 30 and May 6, 2020, according to shipping data compiled by Bloomberg. One vessel was loading at the Cove Point terminal on Wednesday.....
The reason for the technical talk is not some quasi-mystical belief that lines on charts have any importance in and of themselves but rather that they show the price points where buy/sell actions were triggered. There are so many cross-currents, from this week's much cooler than normal Midwest and East Coast temperature forecasts to the re-opening of parts of the economy on the demand side to the overarching reality of decreasing production of "associated gas" as Exploration&Production companies go bankrupt and oil wells are shut in or not completed.
Throw in the LNG exports wildcard which have gotten to be so important over the last couple years and the computers are reaching for anything that might give them an edge in directional forecasts, from which all the intertemporal curve trades spring.
Frankly, trying to figure out soybeans in 2019 with cold and wet weather seriously affecting planting with monster fear/greed moves engendered by the backdrop of U.S. - China trade maneuvering and the fact that pigs killed by African Swine Fever require no feed, frankly with all that beans may have required grade school level analytical skills compared to trying to understand the cross-currents in natural gas this month.
The don't call the shoulder-month trades The Widowmaker for nothin' you know.
Front futures $1.8490, down -0.045.
