Natural Gas Update May 29,2025

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Natural Gas --NG is down 1.9 cents
NG spot futures are slightly lower selling off overnight in continuation of the weakness seen Wednesday, which was due to lower feedgas volume due to an issue at the Freeport plant, as well as a cooler forecast thus lowering demand and the expectation for another build in gas storage that will equal the 5 year average.

Feed gas nominations to Freeport LNG dropped significantly during intraday trading Wednesday, indicating a possible outage, according to Wood Mackenzie pipeline data. Data showed possible flows on the pipeline were near the same levels as Friday, when Freeport LNG reported a compressor issue that caused an outage of Train 1. (NGI)

Weather demand in some key areas, notably Texas, look sluggish in the first part of June. Dallas will see highs in early June that are anywhere from 2 to 13 degrees below normal.

The EIA natural gas storage build for today is seen as +93/+99 as per news wire surveys. That compares to last year's build of 84 BCF and the 5 year average build of 98 BCF. 

Analysts have said that so long as spot prices remain far enough below front-month futures to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract. (Reuters)  Today the early morning quote for next day Henry Hub cash is $2.900/$3.100. This is versus the July futures printing $3.522. Yesterday early on the next day Henry Hub cash was quoted $3.15/$3.25 versus June futures then printing $3.371 and July futures printing $3.705.

NG futures open interest rose by over 22,000 contracts on the CME in Wednesday's activity. We see this as mostly new short positions in the July, August, and February, March and April 2026 contracts.

A large trade was seen Wednesday on the CME Block board in the April October 6 month calendar spread puts. The minus 40 cent put was purchased against selling of the minus 50 cent put at a cost of 3.5 and 3.6 cents. This looks to have been a rolling "down" of an existing position. The minus 50 cent put saw open interest drop by 3,000 contracts, while the minus 40 cent put open interest rose by 7,600 contracts, thus initiating the open interest in the strike. A further trade in Calendar spread options seen Wednesday was in the July October minus 10 cent put, which traded 6.5 cents, in a trade of 2,000 contracts that closed out a position, given open interest data from the CME.  Additionally, we saw some larger volume traded in the August $5.00/$6.00 call spread at a cost of 4.8 cents with delta futures sales in August at $3.68.  Also, the August $5.00/$5.50 call spread saw volume trade at prices between 2.9 and 4.0 cents.

Momentum remains positive for the NG on the DC chart. There is no rollover gap from the June expiration as today's July low fell below June's expiration high. Support via the DC chart lies at 3.454-3.462 and then at 3.335-3.340. Resistance comes in at 3.648-3.656 and then at 3.723-3.728. The market has tested the 50 day moving average on the DC chart. That average lies at 3.542.

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