Natural Gas Corner - Market Review - Gut Shot To The Bulls Today In The Natural Gas Market

This week’s trade in the natural gas market must be one of the most disappointing for the bulls during this current winter.

The arrival of another strong round of winter heating demand expected across much of the U.S. rallied the spot April 15 contract over the $3.000/MMBtu level in Monday’s early trade.  But the rally failed to hold as sellers pushed the market back lower by Monday’s close.

In today’s session, the market was again under pressure following release of the EIA weekly storage report which came with a 219 Bcf draw, well below the pre-report average guesstimate of 241 Bcf and under the 226-257 Bcf range of estimates.  By today's close, the market had fallen 5.7% on the day and is down 11% from Monday's high.

Weekly storage withdrawals continue to come in near the lower end of pre-report estimates and have been largely bearish events throughout this current winter.  With 5 weeks to go in the withdrawal season, gas in storage at the end of this winter should fall in near the 1,565 Bcf level for end of March storage over the past 10 year.

The one bullish factor, winter heating demand, is rapidly leaving the natural gas market as it enters into the post-winter shoulder season which could lead to a further drop in the spot market price possibly back toward the lower-$2.000 level by the end of this upcoming summer.

 

A hotter than expected summer could lend support but with storage near the 10-year average and production reaching new all-time highs, there is little to get bullish about in the natural gas market at the present time.