Will Natural Gas Fall Below $4 in the Near Future?

The price of natural gas changed direction and dropped to its lowest level since mid-May. The recent injection to storage was higher than normal but is the current pace enough to bring the storage close to the normal level by November? Will the price of natural gas come down below $4 anytime soon? Let’s examine these issues.

During last week, the price of natural gas fell by 2.7%. Moreover, other natural gas related assets such as United States Natural Gas (UNG) and Chesapeake Energy (CHK) also decreased by 3.5% and 1.5%, respectively.

The EIA reported that last week’s injection to storage was 110 Bcf; the underground natural gas storage reached 1,829 Bcf – around 31% below the 5-year average. Last week’s injection was 36% higher than the 5-year average and 16% above last year’s injection to storage. The table below presents the injections to storage in the past several months compared to last year’s injection and the five year average injection.

The rest of this analysis is at Seeking Alpha

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