The natural gas market fell 9.5% in last week's trade dropping back toward but holding over the 4-year price lows set in late-April.
Storage injections and bearish weather forecasts are the primary factors keeping prices weak even as the market enters into the heart of the summer cooling season.
The latest 6-10 and 8-14 day NWS forecasts show even greater areas of above-normal temperatures with rain coverage across much of the U.S. particularly in the highest usage Midwest and Texas. Increased rainfall could decrease summer cooling demand for natural gas even further which has been fairly low to start the summer as evidenced by storage injections since early-April.
The one recent bullish piece of news is the EIA-reported drop in U.S. dry natural gas production which fell from 72.4 Bcf per day in February to 72 Bcf per day in March. This delayed bit of news does show production is being affected by the drop in the natural gas rig count with U.S. production decreasing 2 out of the past 3 months.
The market may continue to weaken in upcoming trade possibly dropping the spot market price back toward the $2.200-2.400/MMBtu level over the next few months.
Longer term, current weakness is an excellent opportunity to buy forward coverage in the market at multi-year price lows.
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