At current levels, inventories are 436 Bcf higher than last year and 642 Bcf higher than the five-year average of 1,842 Bcf. High inventory levels are one of the main downside catalysts for natural gas markets.
Natural gas prices rise as traders react to the EIA report. The market is trying to stabilize near recent lows. Traders ignore high stocks and bet that the market has bottomed.
It appears traders are willing to bet that LNG exports would increase, boosting demand and supporting prices. In the short term, the market remains in surplus. Demand for natural gas is generally weak and bulls need positive changes in the weather forecast to create lasting momentum.
At this point, previously announced production cuts have not adequately supported natural gas prices. From a technical perspective, a move above the $2.00 level will give natural gas a chance to gain additional upside momentum in the near term.
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