Courtesy of Sober Look.
This morning’s EIA natural gas in storage report took everyone by surprise. We started out with this projection.
At 10:30AM the EIA had this to say: “Working gas in storage was 2,944 Bcf as of Friday, June 8, 2012, according to EIA estimates. This represents a net increase of67 Bcf from the previous week.” This was visibly below the Bloomberg survey.
So what’s the big deal? Again, we have a technical issue in the market. The nat gas market has been left for dead with the speculative part of the market piling into the short positions. A surprise in the inventory number sent the shorts covering. And in this market a short covering is not a couple of percent. Natural gas futures spiked over 12% in a short period of time.
It remains to be seen whether this rally will carry over to next week. But this is a good lesson for other markets with overextended short exposures such as oil, euros, etc.