Natural gas prices extended this week's downward move today, with the prompt month August contract settling 1.7 cents down on the day, breaking below the 2.30-2.32 support zone.
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Today's move lower came in spite of the EIA report that showed an injection of 62 bcf for last week, which was actually on the lower end of the range of market estimates.
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This reflected tighter supply/demand balances that were tighter (more bullish) week over week, but that along does not tell the full story. Balances remained on the loose side of the trend line when looking at the same gas week over the last several years, much looser than last year.
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Also, production declines started in the middle of last week ahead of Hurricane Barry's arrival along the Gulf of Mexico coastline.
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As a result, the market can more easily discount this number, with the thinking that it would have been higher if not for Barry, hence the tightening may be somewhat artificial.
Add in the lack of strong heat in the weather forecasts beyond this weekend, and the bearishness makes a little more sense.
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