May Natural Gas Trending Up Despite Season

March 30, 2017 11:08AM CDT

The overall trend in the May Natural gas contract is up. Resistance on a daily chart is at 3.255 – 3.270. A close above 3.310 signals a breakout targeting 3.400 to the upside. Momentum studies MACD, Slow Stochastics, and RSI are all above mid-levels, and headed North. 

Close in support is at 3.190. Below that, the 3.150-3.140 range stands out as strong support, and a close below 3.060 would violate a corrective low and negate the current trend. New short plays can be initiated at this point.

Larger than expected draws support the price action here. We got a -43 bcf draw today in the natural gas storage number, as opposed to an expected draw of-37 bcf. Both numbers are greater than the 5 year average of 27 bcf. A late winter, and an early spring blast of arctic air sent the mercury plummeting below average temps, accounting for the larger than expected draw. 

Good export numbers are also supportive of natural gas prices, which are the highest they have been since Feb. during the peak of heating season. Exposure to the long side is recommended until technical damage is done to the charts. You may consider long May contracts or long May call spreads for the short term run up.   


May Natural Gas Daily Chart


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.