What to expect next week - nothing..
The September contract expired at $2.638/MMBtu last Thursday.
Warmer weather this week and next week are not likely to move the needle at all for nat gas. End of injection season numbers and a mild winter due to a strong El Nino are weighing on the market and movement to the upside to any significance is unlikely for the near future.
At this season’s pace, we will hit record storage of 1.297 Tcf in the GoM on the week ended October 02nd, and we figure the odds of hitting record storage by the end of the season narrowed to better than even money. Furthermore, we can test demonstrated working capacity of 1.503 Tcf on the week ended October 23rd, however the odds of this occurring are much wider, i.e. 8/1 or an 11% chance.
Note the Contango Spread continues to narrow – making long term deals a no brainer
In addition you will see a very narrow range in the technical charts with small daily volume due to the extreme volatility in the other markets – namely crude and equities. Simply put – no one is paying attention to nat gas right now.
Keep in mind this isn’t to say that supply won’t be tested at some point in the foreseeable future – so look at this as an opportunity.
The route isn’t over, $33 oil is a very real possibility (2009 low)
The overall trend to this market over the YTD is down. There isn’t any fundamental reason for natty to rally and technicals have broken down even further after the breakout to the downside of the narrowing consolidation formation 14 sesions ago.
The market has continued to form another consolidation pattern (very Narrow) between ~$2.60 and ~2.70. as warm weather subsides and production ramps up – I think it is likely that the market tests the Aprlil lows of $2.44.
In addition – without any kind of deep freeze forecast – the market could see the front end of the curve dip further towards $2.00 before its rally for actual cold weather hitting as it seems to do every year now.
Natural Gas Inventories currently stand at 3,193 BCF
The EIA reported a net storage injection of 94 BCF this morning for the week ending August 28, 2015. This week’s report was above the market’s expectation which was centered around an injection of 91 BCF. It is bearish against 79 BCF injected in this same week last year and against the five year average injection for this week of 60 BCF.
Natural gas continues to bump along near the bottom of summer trading range as a well-supplied market has kept a firm lid on pricing.
Natural gas inventories currently stand at 3,193 BCF
which is 495 BCF greater than from this same week last year and 122 BCF greater than the five year average.