Natural Gas Corner - Market Review - Storage Back In Focus

Natural gas prices slumped back lower in today's session as another hefty storage injection of 99 Bcf  (billion cubic feet) again turned the focus back on to burgeoning natural gas supplies.

Storage injections since the first week of April have totaled 1,291 Bcf , 246 Bcf or 24% above the 5-year average.  The amount of gas in storage relative to the 5-year average has turned from a 10.5% deficit the first week of April into a 2.7% surplus over 15 weeks gaining 1% over the last week alone.

If the current storage pace of injections continues averaging 20-25% above the 5-year average, storage at the end of October could be reach a record high exceeding 4,000 Bcf.  The current peak storage high was 3,929 Bcf from 2012.

Near term weather forecasts have turned hotter but the longer range forecasts remain slightly bearish.  Once summer cooling demand eases, the natural market will face a real test of underlying strength.

Without a sustained bump in end of summer cooling demand, the likelihood is for the market to fall to new 2015 price lows an d in many cases, new all-time price lows.  Seasonally, these lows tend to form during the post-summer "shoulder" season typically during the months of August-October depending on the storage situation.

How low prices may go is uncertain, but a similar storage situation in 2012 dropped the spot market to a 1.902 low before bottoming.