Natural gas prices earlier this week moved back toward the upper end of the past 11 week range partly on private weather forecasts predicting another cold winter.
But keeping a lid on the market as has been the case for nearly 3 months has been record large storage injections. Storage injections during 2014 have surpassed the 5-year average injection during a similar time period by 35% taking March end storage that had reached an 11-year low of 822 Bcf up to 2,988 Bcf in last week's EIA report.
With 6 weeks to go in the current injection season, an average of 82 Bcf per week will need to be injected into storage to reach the 3,450-3,500 Bcf mark at the end of October many analysts' are predicting.
Today's late day sell off from key resistance puts the bulls on the defensive heading into tomorrow's storage report. Pre-report estimates are fairly wide at 98-126 Bcf, averaging 107 Bcf according to Dow Jones. Last year's injection was 99 Bcf and the 5-year average is 85.
If tomorrow's storage injection comes in at the high side of estimates similar to last week, it could be the final proverbial "straw" that breaks the market's back. If weather remains normal and storage injections large, new prices low could be set before a final seasonal low for 2014 is set.
But longer term, the market trend is bullish ahead of winter and once a bottom is in place, a winter rally back higher is expected into the early months of 2015.
Carl Neill
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