Natural gas daily recap: April 29

Mike Zaccardi, CFA, CMT

- Natural gas futures fell $0.079, -4.1%, to settle at $1.869 on Wednesday

- Cash was down more than a dime; the rolling 12-month strip was down a nickel to $2.47

- On the chart, support is near $1.50, $2.00 is resistance
- This morning, June natural gas is called slightly higher to $1.88.

Natural gas prices for June delivery fell sharply yesterday. June took the cue from May, finding resistance at the $2.00 mark as near-term prices continue to be under pressure while intermediate-term contracts seem to be in at least a temporary bull market. The January 2021 contract remains above the $3.00 figure. There are demand concerns, however. LNG cargo cancellation headlines have popped into the news-flow this month with a shifting global landscape. Analysts are uncertain, but seem to expect a few Bcf/day in demand loss from weaker LNG exports in the back-half of 2020. US and foreign LNG prices have been converging for the last few years, and at an accelerated pace in the last 9 months. Meanwhile, US natural gas production has ticked to year-to-date lows, continuing its descent from the November 30, 2019 peak. There are many changes going on in the supply/demand balance. Perhaps not surprisingly, near-term NG prices have been volatile, but still range-bound. Traders will look to today’s EIA storage report expected to show a 70 Bcf build, near the 5-year average.

- The EIA will report the storage change for the week-ending April 24 at 10:30am. Consensus is a build of 70 Bcf with a range of 62 to 76 Bcf. The estimate compares to a 114 Bcf build a year ago and the 5-yr average of 74 Bcf. A build of 70 Bcf would bring storage to 2.21 Tcf, 55% above last year and 19% above the 5-yr average. The ICE futures market suggests a build of 74 Bcf. (Dow Jones)

Crude oil rose $2.72 to settle at $15.06 on Wednesday. Gasoline was higher by $0.06 to close at $0.7272. Heating oil futures added $0.0637 to settle at $0.6945. Oil prices have rallied from $10 on Monday night to $17.50 this morning as optimism grows for a pick-up in economic activity for the balance of the year.

chart via