Trade in the natural gas market keeps getting slower and more boring by the day.
Market prices remain in a very narrow trading range flat-lining in a 14 week sideways range.
It is interesting to see the lack of underlying volatility in the one of the most volatile commodity markets listed. One highlight of low volatility is that it is typically followed by a period of very high volatility.
Volatility in natural gas will increase once the market breaks out of the current range. As has been written many times before in previous posts, a final price low for 2015 is expected over the upcoming next few months of trade. This low will likely form as summer cooling demand eases and winter heating demand has yet to kick in.
Storage is expected to end the year at or above the record high of 3,921 Bcf posted in 2012.
The wildcard in the market has been production which has been showing signs of moderating and possibly decreasing after remaining steady near 72 Bcf per day the past 10 weeks. If production does begin a sustained decline, it could become a bullish factor later this year.
August temperatures and forecasts remain above-normal which is supportive near term, but the longer term test for the market will be when summer cooling demand begins a seasonal decline later this month.
If storage increases as expected, the natural gas market could for a second time in 3 years revisit the lower-2.000 area later this year.
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