It was "EIA day" today, which usually means some solid price volatility, but price action today was rather muted in the wake of the number, which actually came in a little under the market consensus, almost dead on our internal estimate.
Despite being under what the market expectation was, prices could not sustain the small rally seen right after the release of the report. The November contract did close 1.5 cents higher on the day, but was actually up more than that before the report.
Why couldn't the market advance higher if the expectation was for a higher build? Well, a 104 bcf injection is still quite hefty, no matter how you look at it, and it is still reflective of loose supply / demand balances, just not as loose as those reflected in last week's report.
Balances still need to show a considerable tightening trend from here in order to sustain a rally, at least in the absence of sustained cold. We do have some significant cold in the forecast as we move to the end of October, as seen in our 11-15 day forecast from this morning.
This explains the recent "range-bound" nature of price action recently, as bullish weather trends battle the bearish backdrop of supply / demand balances. Until we see what the weather pattern has in store for November, this choppiness may continue.
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