Natural gas prices fell lower on Monday losing 2.6% as moderating weather forecasts and rapidly filling storage kept buyers at bay.
With 12 weeks left in the current injection season, the market is on course for a record amount of gas to be put into storage this year. Over the past 5 years, an average of 886 Bcf has been injected into storage over the upcoming 12 weeks.
There is currently 2,977 Bcf of gas in storage. If the 886 average is reached in 2015, there will be 3,863 Bcf of gas in storage by the end of October. However, storage injections during this year have averaged 22% above the 5 year average. If this trend continues, over 4,000 Bcf of gas could be put into storage by year's end.
Technically, the triangle on the weekly chart was almost triggered today with the sell off to a 2.718 low by the September 15 contract. A close under 2.700 would initiate the triangle which has a downside measuring objective for trade down to the 2.100 level.
On a supportive note, production has now declined 6 out of the past 11 weeks falling by .5 Bcf to 72 Bcf per day. While production remains near a record high, it shows signs of moderating and possibly falling after 6 years of almost continual monthly increases.
The next few weeks could see sharply lower natural gas prices. The measuring objective for the triangle on the weekly chart points toward a final post-summer sell off. This should be the best opportunity since 2012 to buy natural gas near a multi-year price low.
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