Natural gas fell down to a new 3-month spot low and a new contract low for the October 15 contract in late trade today.
A drop under weekly low support is technically bearish heading into tomorrow's session which could see increased volatility following release of the weekly EIA storage report at 9:30 am central.
Pre-report expectations are for fairly large 86 Bcf to be injected into storage for week ended 08/28. This is in comparison to a 78 Bcf injection last year and a 5-year average injection of 60 Bcf.
Last week's 69 Bcf injection came in well above expectations but the market failed to break to a new low. Tomorrow's expectedly large injection could again be setting the market up for another short-covering rally as market sentiment has become decidedly bearish.
The latest 6-10 and 8-14 day forecasts remain hot over the eastern U.S. providing light support to the market.
Tomorrow's injection should be big event for the natural gas market possibly being the catalyst to decisively break the market out of the 3+month sideways range.
But if the number comes in smaller than expected, another short-covering rally could materialize. If the market does rally, it should be a quick spike higher followed by an even sharper sell off back lower.
The winter 15-16 and summer 16 strips both set new all-time lows in today's trade. Another bearish indicator for the nearby October 15 contract?
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