US Natural Gas … Buy Your Winter Clothes in the Summer!

NatGas futures (symbol: NG) continue to work off the over bought condition resulting from its late winter run-up to the $6.493/MMBtu level. Natural gas storage injections are a critical issue every year, however the required pace of injections this year is an industry challenge.

In our post dated 27May14, which can be found here …, we stated “The challenge currently facing the US Natural Gas industry … inject into storage 2,800 Bcf prior to the start of the 2014-15 winter.”  That translates to a straight-line fill rate of 93.3 Bcf per week (30 weeks in the 01Apr-01Nov period). Since the first week of Apr14, injections have averaged 92 Bcf per week, quite impressive. However, any threat to production (hurricane season, raw material supplies, labor shortage) and transportation (pipeline disruption) will result in bullish price action. 

The following Working Gas in Underground Storage chart, released 10Jul14, is provided courtesy of the US EIA.


The pullback from the $6.493/MMBtu level continues to reflect lower volumes, moderating volatility and retreating stochastics. Support lies at the $3.95 and 3.12 levels. Lots of resistance between $6.50 and 8.21 range. Prices are supported by fundamentals. Remember the old saying … Buy your winter clothes in the summer!

NatGas Chart, 11Jul14

Murphy & Co’s Natural Gas model is currently short.  To learn more about Murphy & Co’s position models, visit

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