Natural Gas Bears Party Like Its 1999!
Today’s Spotlight Market
The Climate Prediction Center?s 8- to 14-day weather outlook for the U.S. has nearly 2/3?s of the country expecting above average temperatures. The exception to the warm weather outlook is the northeastern sections of the U.S,. from the upper Midwest and Great Lakes region through the Mid-Atlantic coast and up through New England. The most recent Commitment of Traders report shows large speculators continuing to hold a large net-short positon in Natural Gas, with non-commercial traders net-short nearly 212,000 contracts for the reporting period ending March 17th.? While both non-commercial and commercial traders have been lightly reducing their positions of late, the non-reportable traders, which are small speculative accounts, have been adding to their net-long positions as prices tumble, with hopes of trying to pick a bottom in this multi-year bear market.
Fundamentals
Judging by the snow we received here in Chicago on Friday, one would never know that spring has arrived. However, for Natural Gas traders the winter heating season has ?unofficially? come to a close, with the Energy Information Administration reporting the first Gas storage injection for 2015. In its weekly Natural Gas storage report on Thursday, the EIA reported a Gas storage build of 12 billion cubic feet (bcf) last week. While the build was not unexpected by market participants, storage injections in March are unusual, as the first week of April is normally considered the end of the winter heating season. U.S. Gas inventories now total 1.479 trillion cubic feet (tcf,) which is over 60% higher than this time last year, although storage levels are over 11% below the 5-year average. The market reaction to the storage build was negative, with the lead month May contract falling to lows not seen since early February, as Gas bears continue to hold the upper hand. While it may seem difficult to be short Natural Gas with prices well below $3, we should remember that prior to the year 2000, Natural Gas prices with a $2 handle were the norm, and many years saw prices dip below $1.50 when supplies were ample. So who says that history does not repeat itself?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for May Natural Gas, we notice prices trading near the lower band of the recent price consolidation that formed between 3.000 and 2.550. Prices are trading once again below the 20-day moving average, and the 14-day RSI has turned weak, with a current reading of 41.55. Support is seen at the recent low of 2.567, with resistance seen at 3.045.??
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