Bears In Charge As Natural Gas Prices Tumble
Today’s Spotlight Market
The National Weather Service Climate Prediction Center is calling for above normal temperatures for most of the east and central parts of the U.S going into the start of October. Mild early fall temperatures should allow an increased amount of Natural Gas to be placed in storage the next few weeks which if accurate, will help to bring Gas inventories closer in line with the 5-year average and start the winter heating season with adequate supplies of Gas in storage.
Fundamentals
Households in the U.S. may get a warm feeling in the wallet this coming winter, as Natural gas futures have fallen below $4 for the start of the heating season month contracts. Mild summer temperatures helped to keep Gas demand for cooling at moderate levels, which led to larger Gas injections into storage for most of the summer. The Energy Information Administration (EIA) reported that 90 billion cubic feet (bcf) of Gas was placed into storage last week, which was in-line with pre-report estimates. However, the injection was more than double the 5-year average for this time of year and has allowed U.S. stockpiles to rise above 2.9 trillion cubic feet. While this is still below the storage levels we saw last year, this is a huge recovery compared to what we saw this past spring, as the brutal winter drew storage levels to near critical levels. In addition to mild temperatures this summer, U.S. Gas production continues to exceed expectations, which will most likely continue to be a bearish element overhanging the market unless we see a return of the ?polar vortex? this winter.
Technical Notes – View Today’s Chart
Looking at the daily chart for December Natural Gas, we notice the market trading near the lower part of the recent consolidation range. Bears have control as prices are below both the 20 and 200-day moving averages. The 14-day RSI has turned down with a current reading of 45.97. Trading volume is beginning to increase as traders begin to shift their focus towards the winter month expirations where the potential for large price moves increases now that we are nearing the end of the peak Atlantic hurricane season. 3.877 is seen as the next major support level for the December futures, with resistance found at 4.252.
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