A slightly colder end of month forecast was not enough to save the natural gas market today which suffered another heavy sell off.
The spot April 15 contract lost .161 or 5.6% in today’s session closing roughly .100 above key technical support at the 2.560-2.570 level.
This week’s storage withdrawal could for a third week in a row top the 200 Bcf mark dropping end of March storage below the 1,500 Bcf level by the end of March. The average storage level for the end of March over the past 10 years is 1,565 Bcf.
But with U.S. production being near a record high, several analysts are now predicting a drop to the lower-$2.000/MMBtu level by late 2015.
Offsetting production is an expected increase in end user demand this upcoming summer particularly by the power generators favoring natural gas usage over coal.
A rapid fall in the natural gas and crude oil rig count could also begin to affect production later this year. The Baker-Hughes natural gas rig count survey released on Friday showed 268 gas devoted rigs, the lowest level since April 1993 and down 83.4% from 2008.
It is difficult to predict where the natural gas market may bottom during 2015, but once it does, it could be one of the best buying opportunities seen for many years to come.
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