As participants await Thursday's EIA inventory report the futures market is continuing to slowly drift lower as the vast majority of the projections for the report are bearish with the market consensus around the 99 to 100 BCF level. As discussed below my projection is around the 95 BCF level. Even though it is lower it is still a Bearish projection. As far as the rest of the drivers of Nat Gas prices are concerned nothing has changed since Tuesday or over the last week or so.
The temperature forecasts are still Neutral at best and have consistently been calling for a combination of above normal and normal temps spread across the country with the highs and lows this time of the year not likely to result in any additional call on Nat Gas as a cooling or heating fuel over the next several weeks...at least.
The nuclear situation has also not changed much with current outages in line with both last year and the more normal five year average.
About the only somewhat Bullish item hitting the news wires today was Accuweather' s long range winter weather prediction. Accuweather is predicting another cold and snowy winter for a large part of the US mostly due to La Nina. The following chart published on the Accuweather website depicts average weather conditions expected across the US during the January through March, 2011 timeframe or the heart of the winter heating season. For interest NOAA will release their winter weather Outlook on October 12 in conjunction with the EIA's next short term energy outlook.
In spite of the forecast for a cold winter currently being projected all signs point to this year's ending inventory level coming in at a very comfortable level, if not near or at the record high levels seen over the last 2 yrs.
With little bullish support expected over the next month or so and with injection levels already outperforming both last year and the 5 yr average I would place a higher likelihood of total inventories at the start of the upcoming winter heating season to be closer to the last several year record highs and well above the five year average. Just some additional Bearish food for thought as the market awaits tomorrow's EIA injection report. Stay tuned.... Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.