RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Natural gas for April remains in downward trend, and is trading in lower range.  Above average temperatures in February and lower draws on the storage both are contributing to a drop in gas prices.  A storage build of 7 bcf v an expected draw of 5 bcf have also has put pressure on prices in the short term.  Another contributing factor is that natural gas is well above the 5 year average.

Yesterday’s session had a high of 2.835 which was a high for the April contract.  However, it was well below the President’s day gap from 2.946 to 2.913.  If prices don’t fill the gap soon, the new trading range will be established. 

Resistance is at the top of the gap 2.946, and the longer it takes to get there, the lower the expectations for resistance to the lower side the gap near 2.910.  Close support is at 2.641 and below that at the contract lows around 2.310.  Momentum studies are at mid-levels and holding steady on daily charts.

Chinese imports may be putting some placing a bit of support in near term pricing.  They are trying to convert from coal to cleaner burning gas.  With massive coal usage this is a daunting task for the Chinese economy.   I’m going to be a buyer on a pull back, near support levels 2.640-2.620.  Maybe selling 290-295 calls above the gap would be another trade to consider.  


Natural Gas 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.