Buyers came into the natural gas market today moving prices higher for a second day. At one point, the spot November 15 contract was trading nearly 2.5% higher on the session but late selling again negated the early morning gains.
The market which was technically oversold after falling to a new 3-year low at the 2.403 level last week is no longer oversold.
Shorter term weather forecasts remain above-normal for much of the U.S. which during October could lower demand for natural gas. Tomorrow's storage report is expected to be near 100 Bcf, below last year's 106 Bcf injection but above the 5-year average of 92 Bcf.
Storage is expected to be at a new high by the beginning of winter which brings production and winter forecasts into the limelight. The longer range forecasts at this point do not indicate an early start to the winter heating season.
Production which has been slowly climbing in recent weeks will also be released tomorrow by the EIA. Current dry-gas production of 72.1 Bcf per day remains below the 74.3 Bcf per day high reached last December.
Volatility should increase tomorrow following release of the weekly storage report. The last two injections have been fairly large beating the pre-report estimates handily. If the natural gas market begins to act positively to bearish news, it could be an indication many of the factors mentioned have already been discounted into the market price.
Seasonally, a second and final low for 2015 is expected over upcoming weeks of trade heading into the winter heating season.
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