Turning to Canada, Enerdata reported that inventories in the country rose last week by 12 bcf to 651 bcf. That leaves storage only 37 bcf below last year’s record high set during the first week of December. With three months remaining in this year’s injection season, that old record will certainly be broken.
Canadian inventories are now 143 bcf and 112 bcf above the year-ago and five-year average levels, respectively.
Natural gas prices are on the rebound today after the now-expired September contract touched two-month lows below $2.60/mmbtu. Given that the support level near $2.70 was thus breached, a larger correction may lie ahead.
Bottom line: Despite our constructive view of natural gas fundamentals heading into winter, we would be wary of initiating long positions until prices show signs of bottoming. The next layer of solid support lies at $2.20.