The natural gas market today broke out to the downside from a sideways trading range that has been in place since mid-January.
The spark behind today's sell off was the EIA weekly storage report which showed a 12 Bcf build, the first storage increase of 2015 and 2 Bcf above the average analyst pre-report estimate. Current gas in storage of 1,479 Bcf might be the low point of 2015; however, colder temperatures expected this weekend across much of the U.S. might bring in one final storage withdrawal for winter 14-15.
Current gas in storage is slightly below the 10-year average of 1,565 Bcf for end of March storage but well above last year's 822 Bcf level.
Focus will now shift on upcoming summer weather forecasts which for the most part have been neutral or bearish and how much gas is injected into storage during the April-October injection season. Last year's injection during this time period were a record high 2,745 Bcf but has typically average 2,046 over the past decade.
Demand this upcoming summer is expected to increase from the electric power generation and the industrial users which could help offset record high U.S. production which has been a bearish feature for the market.
Current weakness in the market should be the final drop lower before a seasonal low forms ahead of the summer cooling season.
A post tomorrow will show the downside price objectives for the bearish triangle patterns triggered today in the summer 15 and winter 15-16 natural gas strips.
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