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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Natural Gas Recovers As Oil Bulls Hope For A Short Covering Rally

Oil

Weekly September Natural Gas Recap

September natural gas futures jumped over 4 percent on Thursday after a government report showed a smaller-than-expected inventory increase. The rally caught the mostly short market by surprise, causing short-sellers to scramble to get out of their positions.

According to the U.S. Energy Information Administration (EIA), U.S. natural gas stocks increased by 78 billion cubic feet for the week-ending June 9. Analysts were expecting a storage injection of 89 billion cubic feet.

Additionally, the five-year average for the week is an injection of 87 billion cubic feet, and last year’s storage injection for the week totaled 68 billion cubic feet. Last week’s report showed natural gas inventories rose by 106 billion cubic feet in the week-ending June 2.

The EIA also reported that U.S. working stocks of natural gas totaled about 2.709 trillion cubic feet, around 228 billion cubic feet above the five-year average of 2.481 trillion cubic feet and 322 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.031 trillion cubic feet for the same period a year ago.

Weekly September Natural Gas Forecast

The large number of shorts in the market suggests that Thursday’s rally was driven by short-covering. I don’t think that shorts flipped the switch to long this quickly based on the EIA report. We’ll be watching Friday’s action to see if the…

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