Natural Gas

tradingpoints

Certainly Natural Gas could bounce at any time, and 4.23 could be a likely area for a bounce. Trends typically terminate or at least pause from 1.272 Fib price extensions, which is exactly where Natural Gas is (basis the Apr contract) on the weekly charts. Tomorrow Natural, Gas weekly storage report is due. Last year’s draw was 42 bcf and the 5 year average draw is 65 bcf. Given the mild March temperatures and recent price action a smaller bcf draw seems to be being priced in.

However fundamentals still weight heavy against Natural Gas:

1. NatGas storage is still 1.2% above the 5 year historical average for this time of year

2. The number of drilling rigs is still increasing and now at a one year high

3. Industrial demand from manufacturing is still MIA.

4. Disproportionate number of front month contracts held by the $UNG ETF weighs heavy on Natural Gas as the speculative demand still skews production supply and demand clearing price.

tradingpoints


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