Natural gas prices continue to crater from the 4-month high reached on Monday with losses on Thursday for the December 14 contract coming in at .208 or 5%, the largest daily loss of the week.
The market got a little ahead of itself on the two week rally which began in late-October lifting the nearby dated contracts higher by nearly 25%.
Weather forecasts remain cold, although not a cold as previously forecast.
Selling over the past 4 days has negated just over 60% of the previous rally gains dropping the December contract back under the 4.000 level.
Important technical support levels have been reached including 62% Fibonacci retracement at 3.970 and the 40 day moving average at 3.990. A small open gap area created on last week's open between 3.955 and 4.046 was also filled with the December contract trading down to a 3.956 overnight low. The market has since rallied back over the 4.000 level in this morning's early trade.
Today's Veteran's Day delayed weekly storage report could lead to continued volatility in today's trade possibly swinging the market back higher. Pre-report estimates are fairly wide averaging a 46 Bcf injection.
The price move that began three weeks ago was the beginning of the winter rally . But after closing higher for 9 straight days, the market was due for a setback which has occurred in this week's trade.
With weather forecasts moderating but still cold, a revisit of the late-October lows ahead of winter is highly unlikely. If natural gas prices do continue lower near term, hedge funds and end-users should be active buyers in the market.
Longer term, the past 3 weeks are an indication of what to expect over the next few months of trade - wide trading ranges, extreme volatility, and a winter rally higher that should be very similar to 13-14.
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