Natural gas prices held firm during Wednesday's session when many other commodities were being heavily sold. Crude oil lost another $2.00/barrel or nearly 5% and gasoline was down just under 10 cents per gallon on the day.
The current commodity meltdown is very similar to 2008, the difference this year being that the equity markets have not sold off in tandem with commodities. That may be changing soon looking at recent economic data.
Tomorrow's EIA weekly storage report should be another volatile event for the natural gas market. Natural gas fell by 5% following release of last week's report.
Pre-report estimates range from 41-65 Bcf to be injected into storage with an average guess of 55 Bcf. This is in comparison to an 86 Bcf injection last year and a 54 Bcf injection averaged over the past 5-years.
If the market has another higher than expected injection tomorrow during a period in which summer cooling demand was high, natural gas could see another sharp sell off.
The bearish triangle pattern triggered on the weekly chart on Tuesday has not spurred follow through selling. However, traders may be waiting for tomorrow's report before attempting to press to market toward new lows.
The summer 16 futures strip (April 16-October 16 contracts) traded down to a new all-time low at 2.933 today falling under the previous low of 2.955 set in April. When the longer dated strips fall to new price lows, it typically leads to the nearby dated contracts also falling to new lows.
The natural gas market could be on the cusp of a major sell off.
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