Today's EIA weekly storage injection of 51 Bcf (billion cubic feet) came in 3 Bcf under the average analyst's pre-report estimate.
The September 15 contract gained .030 immediately following release of the weekly report but was trading back down after 10 minutes. Sellers used the uptick to hammer the market back lower.
While today's injection came in slightly lower than expected, it was the 15th injection out of the past 17 which exceeded the 5-year average. The 10.5% deficit of gas in storage that existed the first week of April has now turned into a 3% surplus.
The market is on course for a record amount of gas to be put into storage by year's end. Storage alone could drop the market back toward the 2.250-2.500 spot over the next few months of trade.
The big test for the market will be when summer cooling demand eases toward summer's end. This is when it could really get "ugly" on the downside in pricing.
On the bullish side, weekly production continues to decline, if only slightly, but could be the start of a continued cycle lower. The natural gas rig count last week reached a new all-time low of 216 rigs according to the Baker-Hughes rig count report.
The latest 6-10 day forecast is mildly supportive but the 8-14 day forecast shows an enlarged area of below-normal temperatures.
Once the market breaks out of the current 3-month sideways range, new price lows are expected.
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