Thursday, September 19, 2019 at 4:40PM
After testing the 2.70 level in the prompt month October contract a couple of times earlier this week, sellers have taken control the last couple of days, especially in today's session, which saw prompt month prices decline nearly 10 cents. Ironically, just yesterday in our Seasonal Trader Report, we highlighted to clients the risk of such a move back into the 2.50-2.55 range. In the spirit of fairness, this occurred quicker than we expected, thanks mostly to a bearish EIA report released this morning. Prices were already lower on weaker daily cash, but the 84 bcf injection reported for last week accelerated the decline. This was higher than our estimate, and while the EIA reports have been erratic lately, seemingly alternating bearish / bullish each week, anything close to an 84 is reflective of very loose supply / demand balances, as seen when looking at the last 10 weeks. The larger injection came despite a hot, higher demand weather pattern in place, with a lot of heat last week in key areas of the nation. Above normal temperatures are forecast to remain quite strong over the next couple of weeks. Time of year tells us, however, that we are getting closer to the point where above normal temperature regimes switch from bullish to bearish, as "normal" levels of HDDs begin to overtake "normal" CDD levels. That would not bode well for natural gas price support if that occurs in conjunction with weaker supply / demand balances. That said, the one thing we know in the natural gas world is that things can change, especially when it comes to the weather. That is where we can help, as our research and daily monitoring of both weather and natural gas fundamentals is designed to keep clients ahead of market moves by anticipating key changes before they occur. Sign up for a 10-day free trial here to give our products a test run, and see where we feel the natural gas market will move next.