Natural gas prices have dropped to their lowest closing price since +April 1st. The lowest we reached this Spring thus far was $4.221 intraday on +April 2nd. As I have mentioned in my prior notes the biggest factor for keeping gas prices high was the severe draw down from storage we had with this winter’s frigid weather and the fear we would not be able to rebuild an adequate supply of gas for next winter.
Stockpiles have begun to come off of their 11-year lows. It is estimated, as I have mentioned, we will need 20 – 35 bcf over and above the normal 5-year average EACH WEEK going into storage for the next six months in order to comfortably meet the demands of next winter. We have only met that goal once so far this year.
But natural gas storage numbers have exceeded the analyst’s estimates each of the past three weeks, and so prices have come down recently. Traders are increasingly expecting inventory additions to strengthen due to the shale boom happening in our country and because they are seeing increases in gas coming through pipelines destined for Midwestern storage facilities.
We closed on the current contract yesterday at $4.358. We have dropped below the $4.44 level and the next support level should be around $4.22 – $4.26.