The natural gas market closed lower for a second day on Thursday as traders largely ignored a EIA weekly storage report that came in slightly lower than expected.
The weekly storage report released this morning came in at an 89 Bcf injection, 4 Bcf lower than the 93 Bcf pre-report estimate. The spot July 15 contract spiked up to a 2.882 high immediately following the report but one minute later was back lower on the day. By session's end, the July contract had lost .078 or 1.4% settling at 2.770.
The market remains oversupplied by an estimated 1-2 Bcf per day. Even with the hotter weather that has come in over the past two week boosting natural gas cooling demand, storage injections remain strong surpassing the 5-year average 11 weeks in a row.
As long as storage injections remain high, the market is going to have a tough time holding onto upside price strength regardless of upcoming weather forecasts.
Unless production starts to fall or consumption actively increases, the natural gas market is likely going to face a record amount of gas in storage at the end of October surpassing the 3,929 Bcf high reached in 2012.
And if that is the case, new price lows are expected over the upcoming few months of trade. Once summer cooling demand begins to ease, natural gas prices should follow.
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