After trading another weekly high, failing at the band of resistance discussed last week, there have now been four straight weekly highs between $2.750 and $2.793, six between $2.740 and $2.839. There is clearly technical resistance in this zone and seldom as clearly defined as that. August went from premium to September in a hurry as it quickly made its way to support, also is just about as clearly defined. The lows of the last three weeks have been $2.492, $2.484 and $2.463. August went off the board exactly equal to the low two weeks ago and a little above the others ($2.492, $.111 under July and the first lower contract expiration since April settled at $1.991). discussed previously, the August contract has been described as historically amply offered. Given the way it went to expiration that again appeared to be the case. The low of its tenure as prompt printed shortly before trading in the contract ceased. Absent a high volume breakout through the resistance described above, September is likely to be subject to the same price negative Q3 seasonal pressures as its predecessor.
Long time readers know that I utilize and trust historical trends and almost always write about seasonal pressures during the summer. The weak close of August gas notwithstanding there really hasn’t been a lot of evidence of that seasonal pressure during the summer of ’23. From the 06/28 Q2 high to Thursday’s expiration July low prompt gas fell $.376 or 13% vs a ten year average decline of 27%. There is a long time left in the calendar quarter, but the historical fact is that September gas tends to trade the low for its tenure as prompt in early August. Over the last seven years (since 2016) that low has traded between the first and sixth trading days of the month five times (’17, ’18, ’19, ’20 and ’22), on the tenth trading day once (’16) and on the fourteenth once (’21). September contracts have settled from $.073 (’18) to $.725 (’20) higher than August in all but one of those years (-$ .008 in ’17). The takeaway from that is that while it has not always been so, in recent years seasonal pressure has been more likely to be in evidence in July and September.
