The natural gas market sold back off following the morning release of the EIA weekly storage report with today's expiring March 16 contract settling at the 1.711 level.
The technical highlight of today's session was the March contract retesting the previous spot contract low of 1.684 set last December. Today's low came in at 1.682, two ticks under the December low, but close enough to qualify as a successful holding of support.
The new front month April contract currently trading near 1.780 will likely retest today's low as support in upcoming trade. Failure to break the market to a new low could indicate a post-winter bottom is forming.
Fundamentally, however, the overall picture remains very bearish. Today's 117 Bcf withdrawal came in 7 Bcf under the lowest pre-report estimate and well below last year's 205 Bcf pull and the 5-year average withdrawal of 144 Bcf. With winter rapidly winding down and 2,584 Bcf of gas in storage, the market will likely face the second highest amount of gas in storage by the end of March expected to fall in the 2,000-2,250 Bcf range.
Production last week also reached a new all-time high in the U.S. adding additional pressure to the market.
The key test for natural gas over the next few sessions will be to see how it reacts following recent weakness. There is a chance a market low is forming technically, but there will need to be some change in a very bearish fundamental picture in order to have any type of sustained move back higher.
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