Natural gas prices fell by nearly 10% in today's session as the spot November 15 contract gapped lower on the open and fell sharply throughout the session.
Losses for the day amounted to .224 as the November contract bottomed out at a $2.050/MMBtu low, the lowest spot price level since April 2012.
Reasons for today's weakness are the same, little weather-related demand for natural gas and domestic storage which is expected to reach a new all-time high later this year.
Today's 6-10 and 8-14 day National Weather Service forecasts only added to the negative outlook with near term and longer range forecasts into December predicting above-normal temperatures across much of the country.
Current storage of 3,733 Bcf (billion cubic feet) should top the 3,929 Bcf peak storage high reached in 2012. If the weather outlook is correct, the market could see continued storage injections during the month of November possibly pushing storage above the 4,000 Bcf mark for the first time ever.
One factor that is not being discussed but which has been discussed in much depth on Natural Gas Corner is the drop in U.S. production. Production has fallen from the December 2014 high of 74.3 Bcf per day (dry-gas) to 70.8 Bcf per day counter to forecasts by the EIA for a rise. If production continues to fall, it could become an unexpectedly bullish factor for the market.
At the present time, all focus is on storage and lack of weather-related demand. The April 2012 low of $1.902/MMBtu is the next technical objective for the market.
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