Yesterday, the government weekly natural gas report released a smaller than expected growth in natural gas supplies. Supplies came in at 24 billion cubic feet, last week’s storage was 28 billion and analysts’ expected a number of 30 billion, causing a 19 cent increase in the front month futures contract. This price increase comes at the end of the seasonal peak summer demand, and historically prices tend to fade from about this point on.
This morning natural gas prices dropped almost 5% after weather forecasts looked cooler than expected and the demand for natural gas this summer may be fading sooner than expected. The front month natural gas futures were trading at $2.8100 this morning. I am looking to short futures after a pullback.
David Cornes holds a degree in economics from the University of Montana.
