Since we seem to be in Classic Rock Song mode for our titles, this week could also be seen as “When The Levee Breaks.”
The mood shifted this week. After months of guarded, if impatient, optimism, the natural gas market finally gave in to the continuing flow of bad news on the economy and turned pessimistic, following virutally all the other markets. The story across the board was a gradual slide downward. Wall Street down. Oil down. Natural gas broke below $3.50 and kept right on going.
Today’s storage report, which came in well under expected levels and lost ground to the historic levels for the second week in a row, has done nothing to improve the mood of investors. And while this is good for energy consumers, we’re not getting a sense that their mood is all that good right now, either.
On the one hand, we’ve been expecting this for a while. As we mentioned last week, the resilience of natural gas prices since early Spring has been largely at variance to the facts. On the other hand, the American economy has been willed out of bad situations by sheer optimism before. There is a component to any open market that has nothing to do with what the facts indicate.
This week, however, it appears that the facts won out.
We’re going to keep an eye on the storage reports. Three straight weeks below expected levels, even at the current record pace, is worth watching. We’re also going to be keeping a close eye on economic indicators. It seems, for the moment, that everyone is paying attention to what they have to say.