It has been quite a week for the natural gas market which has essentially crashed to a new 3-year low. The now expired November 15 contract traded down .547 or nearly 22% over the final 5 days into expiration on October 28th.
Problems facing the market are well known to Natural Gas Corner readers - too much supply and too little demand.
Today's storage injection should fall from previous weeks' injections now estimated at 68 Bcf, but should still be large enough to keep the market on pace to reach a new all-time high in storage later this year.
Weather forecasts released this week only added to the negative price outlook with the near term weather forecasts expected to remain above normal throughout much of the eastern U.S. Weather forecasts turned hotter in early-August with this outlook now forecast to persist into December.
As negative as the news in the market currently is, a unique opportunity has arisen to buy natural gas at a multi-year price low.
Weather-related demand for natural gas could quickly rise if forecasts for a colder end of winter are correct. In 2013-14, winter heating demand was initially low but rose in the early months of 2014. By the end of March 2014 , over 3,000 Bcf of gas had been withdrawn from storage as the spot price rallied up to an eventual high of $6.490.
A repeat of the winter 13-14 may not occur this year. But it is way too early in the winter heating season to get overwhelmingly bearish natural gas particularly following this week's sell off.
When everyone else is selling, it is time to figure out a way to fade the masses. Natural gas prices will not stay low forever.
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