Sunday, August 12, 2012

Natural Gas Moving into a Downtrend

Natural Gas prices have made a decided turn to the downside over the last two weeks as has the short term temperature outlook and the nuclear power outage situation... all now more biased to the bearish side than they were in July. The spot natural gas futures price peaked at about $3.28/mmbtu on July 31 and has been continuing to slide ever since. In the last eight trading sessions the spot natural gas contract has lost $0.507/mmbtu or 15.5% since hitting the high of the uptrend.

Currently the market looks like it is trying to settle into a technical trading range of around $2.70/mmbtu to about $3.17/mmbtu. If the $2.70/mmbtu level is breached the next stopping point could be down to the $2.50/mmbtu level. The Nat Gas market has had a good recovery run rising from around $1.90/mmbtu back during the second week of April to the $3.28/mmbtu high previously highlighted.

The majority of the support for the rally has come from the consistent underperformance of weekly injections throughout the entire injection season so far. In fact weekly injections have averaged around 67% of last year which has resulted in the overhang in inventory continuing to narrow throughout the season. However, even with an underperformance of around 33% so far this season there is still a considerably large amount of gas in inventory versus last year at the moment......Read the entire CME Group article.

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