Natural gas prices closed higher on Monday overcoming a selling bout that affected most of commodity classes.
The crude oil and heating oil markets both lost over 3% in today's trade with gasoline down almost 9 cents a gallon or just over 5%.
The grains markets were also sold as were the metals. But natural gas bucked the trend and closed higher as August weather forecasts continue to heat up.
Weather has been supportive this past summer but not enough to sustain a bid under the market. Prices over the past 3 1/2 months have rallied higher on hotter weather forecasts but then sell back off on strong storage injections keeping the market in a sideways range.
There are indications natural gas production may finally be falling as shown on a previous Natural Gas Corner post last week. The EIA in the latest Natural Gas Monthly estimated May production at 73.6 Bcf (billion cubic feet) per day, 1 Bcf lower than expected and 1 Bcf lower than April production.
The natural gas rig count also fell last week to a new all-time low of 209 rigs according to Baker-Hughes down 7 from the previous week.
Falling production could become a bullish factor for the market later this year. But it might be a little early to focus on production with natural gas storage rapidly filling up. 15 out of the first 17 injections of the 2015 injection season have surpassed the 5-year average with storage on course to reach a new record high by year's end.
Storage will likely overshadow production over the next few months with expectations for new price low in upcoming trade.
But with production possibly topping, the market could be in a bullish uptrend by year's end.
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