Natural gas prices closed weaker in today's trade following yesterday's rip higher as weather forecasts have turned back toward more moderate temperatures.
This weekend's weather demand could be the highest of the current winter if forecasts are correct but is expected to ease on the 8-14 day horizon. There has been some disagreement on the 8-14 day forecast with a fairly low 4-10 level of confidence. If weather demand does remain strong, prices could hold at the 2.100-2.200 spot contract level. But regardless of February weather demand, current gas in storage nearly 18% above the 5-year average should keep upside strength to a minimum.
Dry-gas production was reported today by Bentek at 72.5 Bcf per day holding very near last week's 72.6 Bcf per day level. Production remains storage even though the natural gas rig count continues to plummet falling to 107 rig last week, an all-time low.
End of March storage is forecast to fall in the 2,100-2,000 Bcf range, the second highest on record behind 2012. Unless production begins to fall, end of 2016 storage could again surpass the 4,000 Bcf mark.
At some point, possibly soon, natural gas could become a buy. But at the present time, rallies should be sold with a probable retest of the $1.684/MMBtu spot contract low set in December expected over upcoming weeks of trade.
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