Natural gas (NYSEARCA:UNG) prices were down 9.85% this week.
Last week's weekly natural gas recap was titled FOMO (fear of missing out) as the price action we saw was not supported by near-term fundamentals. This is what we said:
Source: Weekly Natural Gas Recap - FOMO
Heading into this week's EIA natural gas storage report, our estimate of +77 Bcf was also higher than the consensus average, and we said that if prices come in around our estimate, we could see prices fall. Initially, we had expected to see some support around the $3.10/MMBtu level as some of the traders we talked to said that's where they are looking to buy more positions, but Friday's price action looked more like a dump rather than dip buying.
Several things influenced the price action we believe this week. One, there continue to be bears out there on a longer-term basis despite the recent fundamental changes and calling for sub $2.50 prices. Two, natural gas bulls need to acknowledge that November temperatures will likely come in above average now. Several weather forecasters we have talked to all point to that conclusion. Lastly, NOAA's winter forecast was not supportive of the "consensus" weather projections leading many to revise April 2017 storage figures.
Looking ahead, if natural gas prices find support around current prices, it will mark another higher low.
Technically speaking, recent uptrend remains intact so long as $2.90/MMBtu isn't breached. Current fundamentals don't support a move much lower than the current price. We expect to see a near-term bottom. We will be writing our detailed thoughts on where natural gas is going in a weekly outlook to premium subscribers tomorrow.
Injection figures for next week is forecasted to be below the five-year average but higher than last year's. November forecasts have been revised higher, and weather experts expect November to remain warmer than usual. Injection forecasts however will still be close to the five-year average despite bearish weather.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.