It will be interesting to see how the natural gas market closes tomorrow's session after falling 2.3% in today's trade. Prior to today, the market had been in a near parabolic price rise increasing 11.6% in just 3 trading sessions. The market fell back off today following release of the EIA weekly storage report.
The EIA weekly storage report released this morning showed a 111 Bcf injection, the 10th consecutive injection exceeding the 5-year average. Current gas in storage of 2,300 Billion cubic feet (Bcf) is 47% above last year's level and 1.9% above the 5-year average. The market is over supplied by an estimated 3 Bcf per day which is why storage injections have been so high.
Overall fundamentals remain bearish outside of a slightly hotter than expected forecast and a double bottom technical reversal which brought in renewed speculative buying.
Key to the next few days will be whether or not the market can regain its footing following today's sell off and close strong into the end of the week. If it does, a bullish reversal will be set on the weekly chart possibly bring in further technical buying support next week.
The inability for natural gas to set new lows in the face of bearish fundamentals may be an indication that bearish news for the most part has been discounted into the current market price. The next few days of trade will either support or deny this assumption.
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