Natural gas prices traded lower for the entire session on Monday but the spot October 15 contract again failed to break under 2.630-2.640 weekly low support.
At some point, support will be broken with expectations for at least a retest of the current 2015 spot contract low of 2.443 set in early-May.
Weather forecasts continue to lend support with above-normal temperatures expected across much of the eastern U.S. However, this means less as the market moves into September when average temperatures across the U.S. fall by 7 degrees from August.
10 weeks are left in the 2015 injection season which ends the last week of October. Rapidly filling storage has kept prices in a sideways trend over the past summer although summer cooling demand for natural gas has been robust.
The increase in demand has not been enough to overwhelm production which is currently averaging 72-72.5 Bcf per day (dry gas production). Production has been moderating holding under the 74+Bcf high reached in late-2014. But it has yet to decline which is what is needed to put a bottom under the market.
The seasonal price trend for the market suggests a post-summer low should be forming now but this low could be delayed until summer cooling demand finally ends.
Not much more to comment on the market as news is limited and price movement is reflective of this fact. Volatility should increase once weekly low support is broken.
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