The Cubs are in the playoffs, and snow is in the forecast…this can't be October!
Before the selloff, natural gas ralliedon weather forecasts showing unseasonably cold weather spreading almost everywhere east of the Missis-sippi River through early next week. With half of U.S. homes use natural gas for heating, the bulls were banking that the weather would spark gas demand and prices.
With unseasonably cold weather and snow fore-casted from Wisconsin, across the Mid-West, and into the North-East the weather related rally just couldn't get natural gas over the key technical hurdle once again after a larger-than-expected stockpile addition.
With a delay of a day of the key U.S. Energy Infor-mation Administration report due to the Columbus Holiday, when the EIA data hit the wire it said pro-ducers added 100 billion cubic feet of natural gas to storage in the week ended Oct. 9. Stockpilesgrew to 3.7 trillion cubic feet, which is 4.7% above their five-year average level for the week of the year and 14% above the level at this time a year ago.
The bearish reality is that stockpiles could set a record of around 4 trillion cubic feet heading into the winter heating season. However, many analysts expect US natural gas prices will raise moderately over the next several years as supplies and demand gradually begin to come back into balance.
As we have discussed in past Signals, gas exports from the Lower 48 states, which are expected to start up later this year, should have a greater impact on global gas markets than on domestic prices. Domestic markets could we forced to slow as pipeline capacity and storage become and not low prices may become the major factor on growth of the industry until the demand and infrastructure can support additional growth.
The above article is an excerpt from EQS Trading's Weekly Publication on the Commodity Markets called "Signals" which we write and publish every Monday. EQS Trading also publishes a daily "Trade Signals" email that provides in-depth "short" and "long" recommendations and trade strategies for the commodity market with entry prices and stop loss levels.
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