More of the same in the natural gas market which cannot seem to breakout from a 9 week sideways range.
The threat of an early start to the winter heating season rallied the market up from support at the mid-3.700 area reached last week to 4.000-4.100 resistance reached this week.
The weekly storage injection of 90 Bcf released today by the EIA again came on the high side of pre-report estimates driving the market back lower into the middle of the recent trading range.
Storage injections continue to be record large surpassing the 5-year average injection each and every week since the second week of April.
If weather remains benign and storage injections large over the upcoming weeks, there is a decent chance new price lows could be set for this current downtrend.
But any subsequent weakness should be short-lived.
Over the past 25 years, there have only been 6 years when the price of the September contract settled over the price of the previous month's August contract. In all 6 years (100% of the time), a substantial winter rally higher followed.
In 2014, the August 14 contract settled at 3.808 and the September 14 contract settled at 3.957.
If history repeats itself for a 7th consecutive time over the past 26 years, a winter rally should take hold in the natural gas market over the next few months that could be very similar to the winter rally of 2013-2014.
Carl Neill
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