Natural gas prices closed higher for a 3rd consecutive day on Wednesday as the spot September contract gained over 3% settling near lower-2.900 resistance.
Continued heat and high power generator demand for natural gas are the primary reasons for recent strength overshadowing, at least temporarily, rapidly filling storage.
Short positions holders in the market have been relentless squeezed over the past three sessions as sentiment last week was decidedly negative following the release of the EIA weekly storage report.
Last week's 32 Bcf injection came in much lower than expected yet the market finished down on the day.
That bearish sentiment has now reversed as the September contract pushes up against triangle "breakout" resistance on the weekly chart at the lower-2.900 level where the market is currently trading.
Triangles are notorious for having "false" breakouts which are followed by sharp reversals back in the other direction. Recent strength could be a sucker rally.
Tomorrow's EIA report will be another important event for natural gas prices typically leading to one of the most volatile trading days of the week.
This week's strength is likely a short-squeeze by weak short position holders in the market. Once it is over, a final decline that takes the market to new lows is expected.
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