Not Just Irma But Seasonal Weakness Pulled Natural Gas Lower

Shortly after testing resistance around the $3.08 level a couple weeks ago to open up September natural gas prices declined rather dramatically, with heavy selling coming initially after the holiday weekend and then heavier selling coming into last Friday as Irma approached Florida. Prices settled last week down at $2.89 support, logging one of the larger weekly losses in awhile.

Prices bounced back somewhat today as damage from Irma did not appear quite as extreme as it appeared it could be, and this has further confirmed that some late-week selling last week was Irma-driven. Yet we believe some of the selling last week was seasonal in nature as demand fell off over the Labor Day weekend. This is a pattern that we have seen a number of times over the past few years. Back on August 31st, even before the risks of Irma had become fully apparent, we published a Note to subscribers warning of cash weakness around Labor Day.

After this we followed up with another Note of the Day explaining how Irma could play in over a week in advance of its landfall and how the apparent break out in prices to open Friday should be viewed with caution.

Since those Notes natural gas prices fell back towards support, which still held on last Friday. We note now that prices are beginning to bounce off of seasonal support 4-5 days after Labor Day.