Another higher than expected weekly storage injection surpassing the 5-year average for a 9th consecutive week was the impetus behind today's sell off which dropped natural gas prices back toward a 4-year low.
Today's 132 Bcf injection as reported by the EIA came well above the 121 Bcf average pre-report guesstimate, also exceeding last year's 118 Bcf injection and the 5-year average injection of 92 Bcf.
Injections of gas into storage over the first 9 weeks of the injection season have totaled 772 Bcf, 209 Bcf or 37% higher than the 5-year average. This brings current gas in storage to 2,233 Bcf which is 50.7% above last year's level and 1% above the 5-year average. The 6.5% deficit of gas currently in storage relative to the 5-year average that existed at the beginning of April has now been erased.
Weather forecasts remains a negative factor for natural gas as does production.
The one potentially bullish signal in today's session was the inability to set new price lows as the spot July 15 contract bottomed out at a 2.556 daily low holding above the 2.540 low set in late-April.
When market conditions appear exceedingly bearish as they currently do in natural gas, reversals can occur, even if only temporarily, as was witnessed in April-May when the market gained nearly 25% over 4 weeks. That rally while short-lived came in the face of strong storage injections and negative weather events.
That said, it is highly likely natural gas prices will fall to new lows before a final bottom is in place. The seasonal price trend over the past 3 and 5 years points to the months of August or September as the time period when a second and final seasonal low for the year is typically set.
Once a bottom does form, it could be a multi-year price low for natural gas.
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