Natural Gas Keeps Humming Along
Today’s Spotlight Market? – ? Front month Natural Gas futures have risen to their highest level since the summer of 2011 due to the blast of cold weather hitting the central US.? The east coast has had unseasonably warm temperatures the past few days, but forecasters are expecting the cold front hitting the Midwest to spread to the east coast through the first week of January.? This could cause demand for Natural Gas to spike in the near-term.
Fundamentals? – ? US Natural Gas inventories fell by 285 billion cubic feet (bfc) in the week ended December 13th, which is the biggest decline since the EIA began tabulating inventory data.? This week?s inventory data could very well show another record drawdown in inventories, which may squeeze shorts out of the market.? Speculative shorts in the Natural Gas market decreased last week.? The December 17 Commitment of Traders (COT) report showed short bets on the Natural Gas market fell by 15,812, to 128,846.? While it does look like there was already some short-covering, the large position suggests that a short squeeze still has the potential to cause a violent spike in prices. ?
Technical Notes? – View Today’s Chart
Turning to the chart, we see February Natural Gas (NGG14) contract breaking through resistance at the 4.40 level on the continuous chart.? Prices have remained above the resistance level for the past two sessions.? Yesterday?s price action formed a gravestone doji, hinting at a possible near-term reversal.? A follow-through selling day, especially below the 4.40 mark, could validate the reversal.? The RSI remains in overbought territory, which threatens to derail the rally.
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