For a second week in a row, the weekly storage injection as reported today by the EIA came in on the upper end of pre-report estimates.
But unlike last Thursday when the market spiked lower after the report only to close the day on the plus side, today's strong number kept buyers on the sidelines.
Today's 112 Bcf storage build was big coming on top of last week's 97 Bcf build. With 5 weeks left in the official injection season which could extend into early-November, storage this year might end at a higher level than many analysts are predicting.
The storage high for 2014 is expected to be in the 3,450-3,500 Bcf range which would be impressive given that storage reached an 11-year low of 822 Bcf last March. But high storage injections over the past 2 weeks and early predictions for another triple digit injection next week could push storage toward the 3,700 Bcf mark by the start of winter.
Countering high storage injections are recent weather predictions which have put colder temperatures in the forecast for the October. Colder weather is what is needed to turn this market back higher. Without colder weather, natural gas prices may have one further sell off to new price lows before a final seasonal low for 2014 is set.
A breakout above 4.170-4.200 weekly high resistance basis the spot November contract is needed to technically turn the market trend higher.
Current weakness is an excellent time to complete winter 14-15 coverage and to add to summer 15 and longer dated contracts.
Once a final low is set, a winter rally at least back to the 4.750-5.000 level is expected into the early months of 2015.
Carl Neill
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