Upside strength in the natural gas market continues to get sold down as evidenced in today's session. After beginning the day with a rally higher by over .050, the March 16 contract sold back off to a new contract low at 1.773 by noon ending the day down on the session.
Most of the forward strips also set new contract lows today but the spot market has not yet breeched the 1.684 low set last December, an area that remains the next key support level in upcoming trade.
U.S. dry gas production reached a new all-time high on February 19th of 73.8 Bcf per day led by gains in the NE Marcellus region. With storage currently at the second highest end of winter level ever, there is very little to get bullish about with prices at this time.
The market shows no signs of bottoming and could get heavily sold if the December 2015 low at 1.684 is broken as support. If the December low can hold as support, there is a chance a bullish reversal could occur.
Seasonally, a post-winter low tends to form at the present time but patience in letting the market first bottom before buying is highly recommended. Giving up the first .100-.150 of a rally is much better than trying to time a 13-year + low in the natural gas market.
Given overall fundamentals in the market, this current sell off could trade much lower than many are expecting before a final bottom forms in natural gas.
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