Author: Willis Bennett

Expiration Trend Continues

Daily Continuous

No surprise here– have discussed it in the Daily and Weekly sections about the previous monthly expiration’s to be well – offered into expiration and to expect the same behavior until it doesn’t. Sure enough the July process was very similar to the previous months– but now we have to wonder about the premium afforded the August contract and the early morning trade may provide some clues.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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No Such Weakness — Yet

Daily Continuous

Little weakness yesterday as prices firmed after a Sunday night decline. Posting a gain it will be interesting to see if the strength continues through the full expiration process. Discussed the historical aspect of the recent expiration’s in the Weekly section so how the market behaves will provide some insight as to the future of natural gas prices.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

Expiration Should Bring Weakness

Daily Continuous

Have discussed the trends of the last few months at expiration and it is clearly a bearish bias. Should it continue (expect another well offered contract) then prices will continue lower into the sub- $2.60 area.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Monthly Trend Expiration Remains

Weekly Continuous

Been discussing the trend of the contract months that have expired during 2024 have been amply offered during their closing days (March, April and May traded the lows of their tenure on the day they went to settlement). February didn’t but lost $.443 (from high to low) over its last three days. June lost $.507 over its last four days as it fell from $2.924 to test the continuation 200 – day SMA. July would appear to be on a similar path. Expect expiring July to test the zone of support between +/- $2.450 and $2.640, which includes 50% and 61.8% retracement of the rally from its February low, its 50 – day SMA and the nearly flat continuation 200 – day SMA that held near the low of expiring June. A failure by July to weaken into expiration would indicate a change in the character and or bias of supply and demand for gas.

Changes in market internals, specifically volume and open interest, strongly suggested approaching the gas market with extreme caution from the long perspective. Prompt gas had traded higher highs with diminishing volume. The May high ($2.924) had traded with a weekly turnover of 3,378,217 contracts, the June high ($3.159) with 3,047,011contracts. At the same time July traded a textbook double top when it challenged its May high. On May 23rd 258,561 contracts traded, 200,816 when it reversed lower from the June high but lacked the buyers to push it further.

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Oops — Got Caught

Daily Continuous

Ok, I confess, wrote yesterday’s Daily thinking I would roll it over to today’s — little did I know that prices were going to drop into the low end of the range. — Was not going to update (limited internet sources) but have decided to use my mobile hot spot on the phone. Nothing has changed except that prices declined to the low end of the range regardless of Storage.

Storage release should give us one of two options — if it is bullish to expectations, prices are likely to test the double top of the July contract seen below:

Daily Prompt July Contract

On the other side of the expectation potential will be a bearish report sending price back to the low of the July trading range (down to $2.70-$2.50).

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

Storage Should Provide Future Bias

Daily Continuous

Storage release should give us one of two options — if it is bullish to expectations, prices are likely to test the double top of the July contract seen below:

Daily Prompt July Contract

On the other side of the expectation potential will be a bearish report sending price back to the low of the July trading range (down to $2.70-$2.50).

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Rocking Slowly to Resistance

Daily Continuous

After testing support earlier this week, prices showed some strength and crawled up to enter some of the near term resistance around $2.94-$3.00. We have a storage report that may effect prices– but I doubt it will have impact on the longer term bullish market bias.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Additional Weakness Continues

Daily Continuous

Price action continued its bearish seek of the low end of the trading range yesterday and seems to be seeking the low end of the range for the upcoming period. While there is some variation as history rhymes, prompt gas continues to follow the pattern of the spring/early summer of ’23. A year ago, prompt gas traded the May high on 05/19 at $2.685: this year at $2.924 on 05/23. The early June ‘23 seasonal low traded on 06/01 while this year on 05/29. The June ‘23 – Q2 high traded on 06/28…about $.15 higher than the May high ($2.839…after which expiring July faded to go off the board at $2.603). So far, the June ’24 high has traded $.235 higher than the May high. I am always startled by how a commodity like natural gas seems to follow some of its historical traits. Let the low range become defined as the fundamental input is well established.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Market Extends Declines Low End to Range

Daily Continuous

Expected some strength at the end of last week but got further weakness that extended the declines. Was expecting weakness but thought it would come this week. Now were going to develop the low end of the range that will likely carry through the July 4th historically weak period.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Q2 Run May Have Materialized

Weekly Continuous

The seven week rally that began following May expiration, has left the gas market severely overbought and delivering multiple clues that suggest the spring rally has run its course. The decline in open interest is one of those clues. Higher price highs without increasing open interest indicating new buying support entering the market, is a form of divergence.

Higher price highs accompanied by lower volume is another (occurring the last couple of weeks) is one that has proved exceptionally reliable over the years. During week ending 05/24 3,387,217 contracts changed hands, this past week a higher high traded with 3,075,538. The high of $3.159 may not be the Q2 high but there is a growing body of technical evidence that will be hard for the market to overcome including in addition to the foregoing:

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