The futures are still trading up, $4.4450 although off the day's high, $4.4950. We'll try the short again, once more unto the breach and all that.
From MoneyBeat:
Days of Near-Record-Low Natural Gas Prices Not Over Yet
Natural gas prices are climbing after a steep drop in supplies. But one analyst says bulls are forgetting something: There’s plenty more where that came from.
High production is still casting a shadow on the U.S. market, and the days of near-record-low gas prices are not over, says Katherine Spector, head of commodities strategy at CIBC World Markets. The current strength in prices could lead to even more supply down the line, she says.
Utility companies have pulled natural gas out of storage at high rates this winter to meet indoor heating demand. In the week ended Jan. 10 – when record-cold temperatures swept the Midwest and East Coast – 287 billion cubic feet of natural gas were withdrawn from storage, according to the Energy Information Administration.
That’s the largest storage withdrawal on record – and the second largest, 285 bcf, occurred last month.
Suddenly, market watchers are worrying that natural-gas supplies could drop to multi-year lows at the end of the winter, raising the bar for producers to replenish those inventories over the summer before temperatures drop again. Front-month Nymex futures recently traded up 2% at $4.412 a million British thermal units, just below multiyear highs.Today's action via FinViz:
Ms. Spector says those fears are overblown. Domestic production held near multi-year highs in December, thanks to technical advances that have enabled energy producers to access supplies trapped in shale-gas fields. Output will only increase as new pipeline capacity is added, especially to transport gas from the booming Marcellus Shale, Ms. Spector said....MORE
Strong draw in inventory but below market consensus
The spot Nat Gas futures contract lost about half of its gains from earlier in the session since the release of this week's EIA inventory report. The report was bullish compared to the historical data but slightly bearish versus the market expectations for a post 300 BCF net withdrawal. The 287 BCF net withdrawal was not an all-time record high but it was still a very large draw from inventory. The spot contract is still showing a gain of about 2.5 percent on the session and is back above the technical support level of $4.40/mmbtu.
From a fundamental perspective Nat Gas stocks are almost 21 percent below last year and 14.9 percent below the so called normal five year average for the same week. The only reason why Nat Gas prices are not surging to historically high levels this winter is due to the robust supply situation in the US offsetting some of the strong heating related demand.
The very early forecasts for next week's inventory are looking like it will be well below the five year average but the following two weeks will likely turn back to above normal withdrawals if the actual weather is in sync with the current forecasts.
The latest NOAA six to ten day and eight to fourteen day forecasts are both still projecting cold temperatures across the eastern half of the US beginning in several days and lasting until the end of January (at least). In addition the market is still focused on what might be a very cold February.Recently:
Today's EIA report was only slightly bearish versus the market consensus but very bullish compared to the so called normal five year average and versus last year. The report showed a net withdrawal that was below the market consensus (287 versus 301), but significantly larger than last year and the five year average net withdrawal for the same period. The 287 BCF withdrawal was above normal for this time of the year. The draw of 287 BCF was near my model forecast (285 BCF withdrawal) this week. The year over year inventory situation remains in a deficit position versus last year and remains in a deficit position versus the so called normal five year average. The current inventory deficit came in at 442 BCF versus the normal five year average or about a negative 14.9 percent....MUCH MORE
Jan. 13
"Natural Gas Futures Soar on Forecasts for Record Stockpile Drop
Jan. 14
Contrary Indicator: "Natural Gas ETFs Jump on Hopes of Stockpile Plunge"
$4.33 up 5.6 cents, daily top tick $4.3530.Jan. 14
The set-up is not looking like a re-visit of the recent $4.43 high, just too many people are aware of the heating degree days records on the 6th and 7th and the expected record pull from inventory to be reported on Thursday.
As one of my mentors used to say as he ran around the floor in a manic fit "Short 'em all..."
"Nat Gas adding to yesterday's gains"
