Natural gas prices rebounded back higher today saved from steep early morning losses by a lower than expected EIA weekly storage report.
Today's storage report showed a 32 Bcf injection for week ended 07/31, well below the 38-47 Bcf range of pre-report estimates. Total gas in storage in now 2,912 Bcf with roughly three months to go in the current injection season.
Today's injection was only the 3rd out of the past 18 the came in below the 5-year average with today's injection 21 Bcf or 40% below the 5-year average for a similar week. As a result, the surplus of gas in storage relative to the 5-year average shrunk from 3% to 2.2%.
Although today's injection was lower than expected, the spot September contract gained only .015 on the day but closed well above the 2.726 early morning low. Not as bullish a reaction as might be expected.
The next few storage injections may come in lower than normal with hotter weather in the southern U.S., particularly Texas. But today's 6-10 and 8-14 day NWS forecasts show a more moderate outlook which could weigh on the market in tomorrow's session.
With storage injections during 2015 running 23% above the 5-year average, storage remains on course to exceed the peak storage high from 2012 of 3,929 Bcf by the end of the year. This is expected to drop the market prices to new lows possibly during the months of September or October depending on end of summer cooling demand.
Production increased for a second week in a row rising by .3% to 72.1 Bcf per day but has been showing signs of topping after falling 5 out of the past 10 weeks.
The natural gas market could be providing an opportunity to buy a multi-year price low in upcoming trade.
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