The natural gas market has rallied from a one-month price low reached last Thursday back toward a new one-month price high in today's trade. But from the longer term, the market really hasn't gone anywhere except sideways over the past 2 months.
Hotter 6-10 and 8-14 day forecasts squeezed market shorts this week causing another sharp rally higher over the past 3 sessions. Early strength today gave way to late-day selling dropping the spot August 15 contract to a lower close on the session.
The market may continue to move higher near term possibly back toward the lower-3.000 level, but with production near a record high and storage injections strong, upside strength should be fairly short-lived.
Current storage of 2,668 Bcf is 1.7% above the 5-year average with 17 weeks left in the current injection season. If longer range forecasts for August prove correct with below-normal temperatures expected across much of the central U.S., there could be a record amount of gas in storage at the end of October surpassing the 2012 peak storage high of 3,929 Bcf.
Production also remains near an all-time high estimated at 72.4 Bcf per day in early-July by the EIA adding further pressure to the market.
A final seasonal price low is expected during August or September depending on end of summer cooling demand. If storage does reach a record high, the 2.200-2.300 level will be the initial downside price objective for a possible seasonal low.
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