Energy

Less than Expected Draw in Natural Gas

Posted 03/29/2018 10:11AM CTJeff Ratajczak

Natural gas is riding a four-day uptrend.   Nearby support is at 2.600-2.610.  After that, December’s low of 2.504 is long-term support.    2.831 is resistance.   A close above the resistance number could signal a run to the January highs of 2.951.  RSI and MACD are trending up and could help a move to the upside.   A close below 2.600 will may signal a selloff to the previous lows, sub 2.500 can be a realistic target.

The near-term forecast is for cool weather, but spring time signals for less heating demand.   Demand for electricity for cooling still hasn’t kicked in.  So, the bulls will have some other news to keep grip on the market.  Funds have a good size net long position, so before the demand decreases for heating, they might want to take profits.  A draw of -75 bcf is expected.  This is slightly larger then average and may support the market today.  The 5-year average is closer to -50 bcf.  Going into the long Easter weekend, I’d be cautiously long today.

Natural Gas May ’18 Daily Chart

natural_gas_may18_daily_chart

Jeff Ratajczak

Jeff attended Illinois State University. In 1993 Jeff began his financial career in the stock market as a retail broker. He transitioned to futures in 1999 with LFG Intermarket Group, which became ZAP Futures. In 2004 ZAP Futures was acquired by RJO Futures' parent company R.J. O'Brien. Jeff's focus is to assist clients in managing risk and speculate through futures and options strategies.