natural gas

natural gas

Monday, October 13, 2014

Natural Gas Corner - Market Review

Natural gas prices rose today following last week's sell off back to the lower end of the past 3-month trading range.

The natural gas market remains mired in a sideways trading range that now enters into a 13 week.

Spot prices have been alternating between support at the 3.700-3.800 level and resistance at the 4.150-4.200 area.

Today's 6-10 and 8-14 day NWS forecasts have put in more below-normal temperatures than previous forecasts particularly for the upper Midwest, a heavy user of natural gas for heating.  But until storage injections are lowered due to increased demand, weather forecasts mean very little in terms of longer term price direction.

This week's storage increase as reported by the EIA is expected for a second week in a row to be a triple digit injection.  With 4 weeks left in the official injection season which could extend into November, peak storage for 2014 is expected to fall in the 3,500-3,600 Bcf range which if reached will fall 300-400 Bcf below levels reached over the past 2 years.

If storage injections remain high, the summer 2015 strip (April 15-October 15) which reached a new all-time low of 3.725 last week could fall in the 3.500-3.550 range before a final low for 2014 is set.

Once a final low is posted, a rally back higher into the early-months of 2015 is expected.  For the winter 14-15 natural gas strip (November 14-March 15), the winter rally should reach the 4.900-5.000 level, at least, which is 1.000+ above the current strip price.

Ensuring weakness in the market is an excellent opportunity to add to longer dated coverage. 

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