Natural Gas Data And Analytics, July 5-10

SUMMARY

Consumption-wise, Sunday's 12z Ensemble are mixed vs Thursday's 12z results: GFS is bullish, while ECMWF is bearish. In absolute terms, ECMWF model is projecting slightly more TDDs than the latest GFS model - particularly, on the back-end. Projected TDDs have stabilized and remain above the norm (+25.4%) as well as above last year's level (+9.4%).

LNG feedgas flows are at 3.2 bcf/d (+0.2 bcf/d from Thursday).

Dry gas production is currently estimated at 88.8 bcf/d (+0.6 bcf/d from Thursday).

Natgas consumption (7-day average) is projected to increase by 5.4% over the next 7 days (from 76.6 bcf/d today to 80.7 bcf/d on July 12).

The net impact on our storage level outlook is bearish (but mostly, in the short-term). Therefore, our storage level outlook will be revised higher – particularly, for the week ending July 10 . However, annual storage "surplus" will continue to shrink, while EOS storage index will remain below market expectations.

In the short-term, the bulls are in control. As long as the price remains above 1.700, the short-term trading bias will remain bullish. Today, the fundamental signals are mixed. On the one hand, the weather factor is very bullish, but LNG feedgas flows are at multi-month low and dry gas production remains surprisingly strong. Indeed, dry gas production is up +2.3 bcf/d from a three-week low.

A break below 1.700, could cause a fall into the 1.690-1.620 range. A break above 1.758 could lead to a gain into the 1.784-1.845 range. It makes sense to sell the rallies - particularly in the 1.800-1.860 range. It makes sense to buy the dips – particularly, in the 1.650-1.600 range. Fundamentally, however, the long-term trends are bullish because annual storage “surplus” is still projected to shrink + we believe that LNG feedgas flows are unlikely to set a new low and should be rising in mid-July, in August and in September.

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