What we’re hearing is a great big settling sound. That would be NYMEX natural gas prices heading, bit by bit, back down to where they belong.

You can only ignore the facts for so long. Or, in the case of NYMEX, the fundamentals. And whoever triggered the price jump that got May off to such a riotous start has gradually been coming to their senses.

There’s plenty of gas. There’s going to be plenty of gas for quite some time now. The “bottom” which everyone is looking for is, most likely, a trough that will extend into 2010, and it’s still a bit early to be getting in ahead of the eventual rise.

The past two weeks have seen a gradual downward trend from our latest example of irrational exuberance. The NYMEX broke below $4.00 on Tuesday, following two weeks of steady decline, and has been bouncing around the $4.00 mark ever since…

…up until now. The weekly storage report was released just a few minutes ago, and…big surprise here…it shows a larger than expected injection. This has…big surprise again…taken what little wind was left out of the sails of even the most exuberant speculators. NYMEX is now busy falling off a cliff, to a new low around $3.65. There’s no reason to believe, however, that this is as low as we’re going to go before we go up for real.

What this means to you. Once is a paradox, twice is a trend. We’re going to see bounces like this in NYMEX right up to the point that the actual recovery begins. Count on it. There are a lot of people out there, with a lot of money to spend, who are anxious to be the “first ones in” on the inevitable rise in natural gas prices. A lot of them are not traditional energy investors, and they don’t necessarily know or follow the traditional rules of the market. They have a lot of faith in their own smarts, and they take great pride in thinking “outside of the box.” If the market fundamentals say prices are going nowhere but down, they will look for signs outside of the market that say NOW is the time to think up. They don’t just want to be richer than you are, they want to be smarter as well.

And they’re going to stick to this plan no matter how many times they end up licking their wounds after jumping too quickly.

Sooner or later, they’re going to be right. And that means that the inevitable recovery of NYMEX natural gas prices is going to begin with a bang. If you’re sitting on your energy future, waiting for NYMEX to hit that best bottom, understand that the bang this time was a shot across your bows. Don’t get left behind.

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