Natural Gas Sinks To 2-Year Lows Despite Recent Arctic Blast
Today’s Spotlight Market
Record U.S. Natural Gas production has some forecasters calling for a ?Gas glut? in 2015, with concerns that rapid increases in production could even surpass the amount of storage capacity by the start of the 4th quarter. If accurate, we may need to see Gas futures prices fall even further to help spur increased demand, particularly for power generation where Natural Gas competes with Coal for fuel to run power stations. ?
Fundamentals
Winter finally arrived in most parts of the U.S., bringing with it many below normal temperatures as we begin 2015. However, for Natural Gas bulls, the benefits of a price rally due to the cold weather outbreak were short-lived as prices fell towards 2-year lows. It appears that the recent cold snap may be short?lived, as the National Weather Service Climate Prediction Center?s 8- to 14-day outlook is forecasting above- to well-above average temperatures for the western half of the U.S,. with a below average chance of precipitation for the northern portions of the lower 48 states. It also appears that traders are becoming more focused on the outlook for record Natural Gas production in 2015 and using any rally attempts due to the prospects of cold weather as a chance to add to a growing speculative net-short position. Gas storage levels, which have been running below last year?s totals for most of 2014, are now at or near parity due to a benign start to winter in December.? Current adequate supplies of Gas in storage are adding additional pressure to Natural Gas prices, which may be difficult to halt barring a return of the ?polar vortex? from last winter.???? ?
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for Natural Gas, we notice that prices have once again returned back into the price range seen prior to 2000, where Gas prices tended to hover between 1.000 and 4.500 per 10,000 MMBTU. One could say that the rise in prices the past decade was mainly the result of a overall bullish phase for commodity prices that peaked in the summer of 2008, and we are starting to see a return to more ?normal? price ranges in general for commodities, with Natural Gas being no exception. The next major support level is found at the August 2009 low of 2.409, with resistance not seen until last winter?s ?spike? high of 6.400.
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