There is little in the way of news outside of the prospect for an increase in winter heating demand to get the bulls excited about in the natural gas market.
Another strong storage injection on Thursday of 94 Bcf helped push the spot November 14 contract down to a new 2014 low.
With the market currently in the Fall "shoulder" season between low cooling or heating demand, price should continue to weaken over the next few weeks.
The one catalyst for a possible reversal would be for weather forecasts to turn colder. But as long as storage injections remain high, the market should remain under pressure.
Hedge funds have been crushed in natural gas and crude oil after accumulating a record high long position in crude oil at the June high and a near record high long position in the natural gas market at the same time. As both markets have fallen to new lows for 2014, funds have had to liquidate into an already weak market.
On-going weakness is an excellent opportunity to add to longer term coverage particularly in 2016 which is now trading below the 4.000 level. Winter 14-15 should be completed now and adding to longer dated coverage as market conditions allow.
Once winter heating demand for natural gas does finally arrive, expect a winter rally back higher at least to the 4.900-5.000 spot contract level in late-2014/early-2015.
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