Natural Gas Deflating | RJO Futures

April 13, 2017 10:22AM CDT

The overall trend in the May Natural gas contract is down. It is between the heating and cooling seasons, so the usage figures should be down. Underground storage should increase too. Storage may be increasing because of the pipeline as well. Resistance is seen at 3.190-3.210, then above that at 3.290. A close above 3.300 is needed to reverse the trend. The momentum indicators are at mid levels and turning lower. This could support lower action if support is broken.

Support is 3.140-3.110. A close beneath the gap near 3.020 may signal sell offs to a new trading range below the three dollar mark.  

Today, we were expecting a 5 bcf build is natural gas storage. The previous week saw a draw of 2 bcf. The actual number was double that and came in at 10 bcf. More Gas equals lower prices. These numbers are above the 5 year average, but slightly lower than last year’s storage numbers. 

The 7-10 day weather forecast has slightly lower than average temperatures forecast, which may increase usage, but not enough to support new hi’s. 

Exposure to the short side of the market is warranted in my opinion. Short the May contract with a trailing stop, or long puts or put spreads for the more cautious trader.

 

May '17 Natural Gas Daily Chart


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