Cold Wave Heats Up Natural Gas Market
Today’s Spotlight Market? – ? Natural Gas futures continue to rally, as the frigid cold weather that has battered the country from coast to coast is expected to fuel demand.? The forecast for the next 6 to 10 days calls for cooler than normal weather for this time of year, which may continue to support Gas prices in the near-term.? Technically, it appears that the Natural Gas market may be headed for a test of the highs made in May of this year near the 4.444 level.
Fundamentals? -? The National Weather Service has forecast that weather conditions will be colder than normal across the continental US through the Christmas holiday.? This is expected to result in a larger than normal drawdown in inventory levels.? Today?s EIA data is expected to show Natural Gas inventories falling by 84 billion cubic feet for the week.? The 5-year average decrease for the week is 76 billion cubic feet.? Much of country is seeing heating demand for Natural Gas at near January levels.? The cooler weather, tighter inventories, and depressed prices certainly set the stage for a nice rally in Gas prices over the past several weeks.? However, over the longer-term, recent developments were not as bullish for the market.? The EIA forecast that production will increase by 0.98 billion cubic feet per day to 71.43 billion cubic feet per day.? This is a 1.4% increase over record levels in 2013.? The EIA also expects demand to decline by 1.6% to 69.58 billion cubic feet per day.
Technical Notes, View Today’s Chart? – ?Turning to the chart, we see January Natural Gas rallying over the past month, with very little resistance.? Prices easily glided through resistance on the continuation chart near 3.82, and prices tested continuation chart resistance near 4.35 during trading yesterday.?
The RSI indicator is extremely overbought, coming in over the 93% mark this morning.? This, coupled with resistance, could impede Natural Gas prices in the near-term.
————————————————————————————————
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the “”Disclosure Statement for Futures and Options”” prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.