Assume normal weather for the balance of the United States natural gas 2014 stock build season and the following 2014-15 winter draw period. Then the NYMEX natural gas complex in general probably will trade in a sideways trend. The broad range is roughly 5.00/5.20 to 3.38/3.55 (NYMEX nearest futures continuation contract).
Unless the upcoming winter is much warmer than normal (or fears grow that it will be), or unless gas production spikes more than most prophets predict, then prices for NYMEX nearest futures probably will not test major support around 3.00/3.13 during the next several months. Recall the 3.05 low on 1/2/13 (and the gap relative to the 3.046 high on 9/26/12) as well as 2/15/13’s 3.125 low and 8/8/13’s 3.129 bottom. Given the low days coverage inventory situation, the NYMEX nearest futures continuation contract probably will challenge the 5.00/5.20 range during this upcoming draw season if the winter is significantly colder than normal (or concerns increase that it will be) or if production gains turn out to be notably less than the EIA’s current forecast.
Since very important gas marketplace bottoms generally do not occur in late July, and as the current build season apparently will add a record amount of net supplies to United States working gas inventory, natural gas in the very near term probably will travel a bit (though not a lot) beneath 7/29/14’s low around 3.72. The withering 42.7 percent bear march from 2/24/14’s 6.493 summit, although substantial, is not as extensive as several past ones. A five percent move under the 3.72 depth gives about 3.54; important support rests around 3.38 (11/5/13 low).
However, the NYMEX natural gas marketplace has achieved quite a few significant bottoms in late calendar August and calendar September. Although history of course does not necessarily repeat itself, look for a key trough around then. Moreover, despite the big jump in United States natural gas production in calendar 2014, with a further moderate increase expected in 2015, natural gas days coverage at the end of October 2014 will be significantly below average. Even by end March 2015, inventory days coverage will be below average (normal, typical, desired, reasonable, prudent) levels, though less so than at end October. And though much can happen between now and October 2015, days coverage then arguably will remain under average levels.
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US Natural Gas- Seasons Come, Seasons Go (8-17-14)
Charts- Natural Gas (8-17-14, for essay US Natural Gas- Seasons Come, Seasons Go)