Commodity Watch: Natural gas traded off $0.20 to close at $11.40 today as the EIA reported gas inventories saw injections of 93 Bcf.
- The Street was looking for an 89 Bcf injection and
- I was looking for a somewhat larger 95 to 100 B's to be put into storage.
- Gas was already weaker on the day and traded as low as $11.14 before it rebounded with a recovery in crude oil.
The uptrend in natural gas prices remains clearly intact but I think we are in for a bit of a softening in prices (not much and not for long) and I think the slope of the storage rebuild function holds the key to gas prices, at least early this summer. If we start to see the green slope steepen beyond last year's injection levels then prices are likely to come in and may eventually test $10.
Without a resurgence in LNG supplies, something that is fairly closely monitored on a weekly basis, I don't see much potential for a return to the $7 to $8 range from which this rally started, not with a La Nina underway (see three month weather forecast here) and hurricane hype just around the corner.
