Author: Willis Bennett

Prices Remain Firm

Weekly Continuous

June traded through and closed above the April high ($2.092) making it the 15th time in 17 years that prompt gas has traded through the calendar April high during May. June also closed above declining trend line resistance, which will likely now serve as support as well as the March high and above the continuation 20 – week SMA for the first time since first two Fridays of 2024.

June’s rally was impressive, but it stopped short of narrowing the “expiration” gap left following February expiration and well short of well – defined conventional resistance presented by the December low closing above that gap would approximately equal the average of historical rallies from Q1 lows to Q2 highs. Volume was a little higher this week (a technically positive point, but just equaled the 20 – week average). Open interest was higher as prompt gas rallied, also a technical positive.

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Prices Remain Within June Range

Daily Continuous

Mentioned in the Weekly earlier this week that the June contract would define its own range which it is and the current range (as in Weekly) remains $1.90-$2.15. As discussed this week will likely define the near term direction for bias.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $2.08, $2.148, $2.168-$2.411 (gap)

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Didn’t Like the Altitude

Daily Continuous

Well, prices close above $2 but then spent yesterday retracing back under that key area. Problem for the bears is that prices didn’t collapse and rather found support above last week’s low for the June contract. Perhaps, that could be interpreted as a bullish divergence but would not take that to the bank. As mentioned yesterday — perhaps (as a trader), you need to take a time out and let the market define its intentions.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $2.08, $2.148, $2.168-$2.411 (gap)

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Rare Close Over $2

Daily Continuous

A close above initial resistance is an interesting signal — the question will by how long does it hold the gains. Will this signal a bias change — this week will provide answers.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Expect the Same Until It Doesn’t

Weekly Continuation

Friday’s contract expiration was remarkably reminiscent of the last days of the March and April contracts. May traded a new low for its tenure as prompt just as the two immediate predecessors, at $1.482, before settling at $1.614 (granted the low was traded in the early morning with little or no volume).

With May off the board at $1.614 the June (soon to be prompt) closed on Friday at $1.923, $.309 premium…nearly a dime (actually $.099) more that May was awarded over April and $.105 more than April over March. Deferred contracts have constructed their own trading ranges (discussed recently), each of which have ultimately been violated to the downside as the expiration of those contracts approached. April’s range was +/- $1.70 to $2.00 before it broke down to settlement day low of $1.481. The calendar March low was $.03/dt lower than the February low. May’s range during April’s turn as prompt was nearly the same as April’s had been except the upper limit was a little lower. Prompt May also broke down to a settlement day low ($1.482, holding .001 above the March low before recovering). Unless new prompt June falls $.442 during the last two trading days of April $1.482 likely, will be the April low, the first higher monthly low since October. Just to continue the analogy, a year ago the April low was $1.946, $.002 higher than the calendar March ’23 low. May ’23 traded that low on 04/14 rather than coincident with expiration and then settled higher at $2.117 (suggesting a departure from the established pattern).

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Where We Going

Daily Continuous

During 2024 the gas market has left several “expiration” gaps. “Expiration” gaps are not uncommon. What is uncommon is if/when they go unfilled for any significant length of time. There was one back on 12/28 after January went off the board premium to February. That gap was filled during February’s first day as prompt. The next one was a big one and remains open between $2.168 and $2.441. March failed after narrowing the gap about a nickel (signalling an excellent indication that much lower prices were in store). That the gap will likely be filled, but not right now. Since the gap that followed February expiration, there have been two others and now likely a third. The first two (after March and April expiration’s) were filled in the following monthly trade. On Monday, if June opens unchanged there will be a $.281/dt daily continuation expiration gap (between $1.628 and $1.909)–and a weekly continuation expiration gap between $1.848 and $1.907. Due to the timing of contract expiration’s there hasn’t been one of those for a while but a weekly of anything is more significant than daily. Expect both will be filled sooner rather than later.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Expiration Day

Daily Continuous

Here we are at expiration and the variances between prompt May and the rest of the market have become pronounced. My suggestion remains the same from yesterday.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

Expiring May Gets Crushed

Daily Continuous

May got hammered while the rest of the summer was weaker but not to the extent of May’s declines. Now becomes the silly expiration process — I may have been wrong in not seeing the May expiration testing the lows of the previous two month’s expiration. Clearly, its in range now after yesterday’s declines. As you all know I do not venture with position going into option expiration nor contract expiration. My goal in this process is to establish good positions to sell in the options market.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Still Hanging at Resistance

Daily Continuous

Prices closed the day at the high and key near term resistance area. Now what? Does it break out above (expect serious short covering) or just return to the low end of the recent range at $1.60). Lets watch with selling premium at higher levels.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Solid Run to Resistance

Daily Continuous

Prices are now challenging the high end of the resistance for the May contract– likely stating that the action is headed to extend lower before expiration. Doubt the declines will match those of the March and April contracts capitulation but the trade has continued to be range trade so a challenge to resistance will be met with selling and a decline back into the range.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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