Can Cold Weather Finally Cause Natural Gas To Heat Up?
? Fundamentals
Natural Gas prices rose yesterday after forecasters predicted below average temperatures for the next 6-10 days in the Northeast. The major storm front that blanketed much of the Midwest with snow has virtually shut down Indianapolis.
The colder temperatures extending into the New Year may not only boost heating demand for Natural Gas, but also power demand from industrial facilities.
Price action has been largely negative for much of December, despite cooler weather patterns and favorable petroleum prices. The Commitment of Traders report shows a fairly sizable net short position from speculators, which likely may help to boost prices, as it indicates potentially oversold conditions. Yet, prices have been at the lower end of their range.
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??? Technical Notes
Turning to the chart, we see the February Natural Gas contract continuing to trade around the 3.40 level. The measure of the double-top pattern on the daily chart suggests prices could potentially test support around the 3.20 level.
The RSI is once again closing in on oversold levels, suggesting there could be some support from buyers.
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