Stephen Schork
Editor of
"The Schork Report"

For tomorrow’s natural gas EIA report the market is looking for an injection of ≈80 Bcf. This is the second report of the final stage of this refill season. Last week’s reported 69 Bcf injection was low by historical standards, but given we are on the cusp of maximum capacity, we are not concerned. Injections typically trend higher through the first half of this phase.

However, we are already shoehorning molecules into whatever capacity that still exists, injections this month will be low by historical standards. To wit, the typical injection at this point is around 94 Bcf. It is clear to us that October NYMEX gas has decoupled from the complex. On Monday the contract settled at a $1.027 discount to the November. But, in between 11am and 1pm yesterday, you could have legged into this spread at below 90 cents as the October spiked and the November failed to follow. The spread settled back up at 98.1 cents after the October corrected lower. As such, 16-day vol in the October has ballooned from 33% to 105% since the start of the month.

On CNBC.com -

Thus, from this point on we are going to give greater credence to the November contract. As far as today goes in the November, offers through the 38% retracement at 4.160 alerts to follow through momentum towards our 4.123 inflection-point. We will look for further weakness below here towards our 4.073 intra-day. On the other hand, a rebound through the 50% at 4.391 clears a path towards our 4.657 inflection-point. Above here we will look for bids towards our 4.529 intra-day.

• Read what other CNBC Contributors are saying...

_________________________

Stephen Schork is the Editor of, "The Schork Report" and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.