Assuming normal weather, the United States natural gas inventory situation probably will remain around average levels (1990-2012 history) in days coverage terms as the April/October 2013 build season marches forward. Yet if NYMEX prices (nearest futures continuation basis) persist over 400, there is a modest risk that over the next several months greater stock increases than many forecasters predict will occur. In any event, even based on current Energy Information Administration (EIA) supply/demand estimates, by the end of winter 2013-14 draw season, US natural gas days coverage probably will be moderately above average. Also, not only has the major bull move from the dismal April 2013 bottom around 190 (4/19/13) to recent highs around 443 (4/18/13) been enormous (about 133 percent); it has been lengthy in time (a one year diagonal time move).
So what is the near term outlook for US natural gas prices (nearest futures continuation)? They probably will retreat further from around the levels reached in mid-April 2013. A 20 percent decline gives around 354; important support exists around the 305/310 1Q13 lows. What about the mystical time horizon called the long run? Suppose weather is normal and the American economy grows moderately. The longer run natural gas trend probably will be sideways, with the broad range roughly 280/310 to 490/520.
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Natural Gas Chart (NYMEX nearest futures) (4-25-13)
Natural Gas- the 2013 Build Up (4-25-13)