Today's trade in the natural gas market was nearly identical to yesterday's as prices remain near the 5-week high reached last week.
For a second day, a rally attempt by the spot June 15 contract failed to clear 2.842 weekly high resistance set on Monday topping out today at a 2.822 high.
Tomorrow's EIA weekly storage report is expected to show a 73 Bcf injection according to a Dow Jones' analyst survey with a range of estimates of between 68-89 Bcf. Last year's injection was 75 Bcf and the 5-year average injection has been 68 Bcf.
Last week's survey came in 7 Bcf below expectations and the market spiked higher by 5% in just 1 minute of trade. If tomorrow's storage number comes in on the high side, the result could be the opposite of last week with a quick sell off back lower.
The latest 8-14 day NWS forecast is hot across much of the U.S. which could boost demand of natural gas for cooling. But as long as storage injections remain high as they have been over the past 4 weeks, the market is going to face substantial headwinds.
There is likely going to be further price weakness in natural gas prices before a final post-winter seasonal low is set. Ensuing weakness, however, could be a multi-year price low.
Declining shale rig counts and increased power generator demand are the two factors which could turn the market around later this year. There have also been recent stories in the news about fracking causing earthquakes in Texas and Oklahoma. If lawsuits result from these findings, production could be affected even sooner.
Tomorrow will be a very important test for the natural gas market.
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