The natural gas market sold off today in the face of a solid weekly EIA storage withdrawal of 198 Bcf which came in 7 Bcf above the average analyst estimate.
Over the past 3 weeks, storage withdrawals have totaled 646 Bcf, 283 Bcf or 78% higher than the 5-year average according to the EIA. Gas in storage at the end of March currently estimated at 1,512 Bcf is already under the 10-year average of 1,565 Bcf for end of March storage with 3 weeks to go in the current withdrawal season. Gas this year could fall to the sub-1,400 Bcf level which would a supportive factor heading into the summer cooling season.
Weather in the eastern half of the U.S. remains below-normal on the latest 6-10 and 8-14 day NWS forecasts but the market focus now is on winter heating demand easing which could put further downward pressure on the market price.
However, a warning should be raised about becoming too bearish as the market enters into the post-winter shoulder season. Yes, the market may fall to new 2015 price lows possibly .200-.300 under current lows set in February. But this weakness if it does unfold as expected should be the final sell off before a market low is set ahead of summer.
End user demand this power generators and industry could move consumption higher more in line with production which has been averaging 4-6 Bcf per day higher than 2014.
Once this occurs, a new bull market in natural gas could form possibly as early as late-2015.
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