May 23 2024 Market Update

Happy Storage Day

The EIA reported that for the week ending May 17, US working gas in storage in the lower 48 increased 78Bcf.  This compares to the consensus of 85Bcf and average build of 92Bcf historically for this week. So a ‘miss’.

This would be considered a bullish number: there was less natural gas to inject than the market (ie the ‘consensus’) expected.  However, the market promptly sold off which would suggest that the market has become a bit too bullish with the huge run up in May.  This doesn’t mean that a new big bear has arrived in town but it is a clue that the market will now take the time to reassess before deciding the next direction. This has been a huge run up in May and no surprise that financial trend following traders have hoped on for a ride.

The market today was quite volatile even before the data release; The NYMEX June contract (which expires next week) made a new high for 2024 at $3.16 US/mm before the data release, and then had a the big sell off afterwards (trading $2.94 at 330pm). Chart from TradingView.

You will be familiar with my attention to the news, not to exactly figure out what is going on but more to get a idea of what the market is feeling.  Today was interesting in that it was the first time that I read “fund liquidation” as an explanation of today’s sell off, meaning that long financial traders are liquidating their positions. Next week’s Commitment of Traders report will be interesting.

The rest of summer has a similar chart: new high at $3.17US/mm before selling off to $2.97.

The Winter 24 strip was a bit more prudent in that it never broke above the January high of $3.787US/mm before trading down to $3.63US/mm

Let me also remind you that even though everyone will be working on Monday here in Canada, it is the Memorial Day Holiday in the US.  Even if the futures are trading, it will be low volume and not really indicative of any actual price discovery. [WFG]

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