Natural Gas Gets Hit Yet Again

Natural gas prices continued moving lower today, with the October contract falling another percent on the day. 

The trend of winter contract weakness continued again today too. 

Unlikely yesterday, however, the majority of the selling today took place in the afternoon. Initially this morning we saw the October contract bounce up to $2.843. This fit in well with our Morning Update, where we emphasized we were slightly bearish on the day but expected a morning rally to eventually fail. 

 

Sure enough, that morning rally failed, and prices continued lower and settled right near the lows of the day. Some of this appeared to be the natural gas market pricing in a storage injection to be announced by the EIA tomorrow that should be looser than the one observed this past week. We saw more weather-driven demand last week than the week prior. 

However, we are looking for a storage injection to be announced that is just a bit smaller than the one last week. This is in part due to looser power burns as well as an increase in Canadian imports from the prior week. Traders are accordingly looking for an injection that comes in rather close to the 5-year average of 65 bcf as well as the year-ago level of 60 bcf. 

In our Afternoon Update for clients today we broke down our expectations for price action into the print as well as what we expect the print to reveal and what role it already has had in influencing natural gas price action today. This comes after our Afternoon Update from yesterday proved right on for today.