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Natural Gas Futures

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.  

Free in-depth analysis of the Natural Gas futures market written by a professional Natural Gas trader.

July 20, 2014

Natural Gas Futures Brokerage, Van Commodites, Inc.

The Natural Gas Future (NGU14), at the Chicago Mercantile Exchange (CME), has traded down over twenty percent since hitting an intraday high at 4.874. When the contract hit its high on June 16, traders were concerned over the low levels of Natural Gas in storage coming out of the extremely cold winter.

Although working gas in storage; reported July 17 by the Energy Information Agency (EIA) stood at 2129 billion cubic feet (BCF), 727 Bcf below the five year average, net injections over the past eight weeks have been 100 Bcf or greater according to initial data from the EIA. Over the prior four years, weekly injections during May and June exceeded 100 Bcf on only three occasions.

NGU14's initial pullback in the middle of June started from a technically overbought condition. Over the past month large speculators have reduced their long position by sixty three percent and the contract is extremely oversold. If temperatures start to heat up from the very moderate levels seen thus far in summer, increased demand for natural gas from utility companies for consumer air-conditioning needs may cut into the net injection levels we have seen over the last two months.

May 1, 2013

Natural Gas Broker, Van Commodities, Inc.

The Natural Gas future (NGM13) pulled back roughly eight percent on an intraday basis today. The injection of 43 billion cubic feet (bcf) of gas into storage was higher than market participants were expecting. With the probable decrease in natural gas demand going into spring for heating needs, NGM13 appears to have further downside.

 

On a chart basis NGM13 appears to have sustained signifigant damage, including the reversal day to the downside today. The contract had become overbought based on several intermediate term momentum studies and short term studies had already rolled over, indicating a loss of upside momentum. Open interest stands at relatively high levels holding out the potential for further long liquidation.

 

NGM13 may find initial resistance at 4.0900-4.1260, with stronger resistance at 4.1800-4.2350. NGM13 may find initial support at 3.8500-3.9300, with stronger support at 3.7000.

 

March 11, 2013

Natural Gas Trader, Van Commodities Inc.

The recent weekly report from the Energy Information Administration (EIA), on March 07, showed a bigger drawdown in natural gas inventories than the market expected. Although the natural gas surplus is presently above the five and ten year average, roughly fifteen and twenty seven percent respectively, the higher than expected weekly drawdown pushed the natural gas future (NGK13) fourteen cents higher on the day. The contract has continued to trade with a bid on pullbacks over the past two trading sessions. Traders will be looking to the next EIA inventory data release on March 14 to try and gauge heating demand for Natural Gas in the previous week.

  

Several short term momentum indicators have become overbought, but NGK13 still appears to have a bid under the market. Over the near term initial support may come in at 3.5800-3.6200. There appears to be some resistance at 3.6900, but if traders can push through this area, selling may not come in until 3.7800-3.8200.

January 23, 2013

Natural Gas Trader, Van Commodities, Inc.

Natural gas (NGH13) traders will be looking to weather updates for the month of February for new price direction. Some weather forecasts, already traded by the natural gas market over the last couple days, are projecting below normal temperatures for the eastern third of the US over the eleven to fifteen day period, but somewhat warmer weather in the six to ten day period. The variation from forecasts should either lend support to prices or allow for further profit taking, after the roughly nineteen percent rally from the January 2 intraday lows. The next piece of news for NGH13 traders to trade on will be the EIA storage numbers on January 24. Expectations are for a 148 BCF draw.

 

Several short term momentum studies are overbought and intermediate term studies are neutral. NGH13 may find initial resistance at 3.5900-3.6300 and further selling at 3.6900, over the near term. Initial support should come in at 3.3600-3.4200 and stronger support at 3.2700, over the near term.

October 14, 2012

Natural Gas market fundamentals have changed significantly over the past year. Last winter’s moderate temperatures, reduced demand along with increased production, due to the success of fracking resulted in a large surplus. Natural gas storage levels stood at six year highs at the end of March 2012, with excess supply 61 percent above the five-year average. Over the past seven months with increased demand from utility companies, due to competitively priced gas relative to coal, and the hot summer the Natural Gas surplus is now 7.8 percent above the five year average at 3,756bcf.

 

The number of rigs drilling for Natural gas has continued to decline throughout the year and is at levels not seen since 1999. As of October 12, 2012 Baker Hughes reported there were 422 rigs drilling for Natural Gas down 15 from the prior week. On a year over year basis there has been over a 50 percent reduction in the number of rigs drilling for gas.

 

It would seem that much of the bullish news has been priced into the gas market over the near term. On a technical basis the market appears to be overbought and a pullback from the gains over the past couple of weeks would not surprise. 

The front month Natural Gas contract (NGX12) is overbought based on several momentum studies, on both short and intermediate term time frames. On weekly charts some technical traders will be looking at 3.617 as initial resistance with further resistance coming in at 3.689 and 3.890. After a pull back to refresh the Natural Gas market looks set to go higher. The price base that has been built on charts over past ten months appears to support higher prices as long as winter 2012/2013 is not as warm as last years. Support for NGX12 on a pullback should come in between 3.350-3.450 and then 3.230-3.320

May 10, 2012

Natural Gas Futures Broker, Van Commodities, Inc. 

The natural gas futures contract for June (NGM12) closed at its highest price since March 26. The news on natural gas supply and demand has been changing at a snails pace, but the price action over the last 14 days may be an initial indication of future support for higher prices over the intermediate and longer term.

The natural gas storage situation appears to be slowly improving as we head into the summer season, when demand for air-conditioning normally increases. The supply surplus created over the past year from the increase in production, due to the success in fracking and the low demand, owing to the warm winter may have finally turned a corner. On a year on year basis there has been a 32 percent decrease in the amount of rigs drilling for Natural Gas in the U.S. and according to the Energy Department's forecast, released yesterday, they expect a 0.1 percent decrease in output and 21 percent increase in demand by electricity generators. Energy Department data also shows the supply surplus in the week ended April 27 narrowed to 50 percent above the five-year average from a six-year high of 61 percent at the end of March, a slow but seemingly steady decline.

The natural gas futures market will be watching for the Energy Department release tomorrow for the build in natural gas inventories. The market expects a build of 32 billion cubic and the five year average build for this time of year has been 84 billion cubic feet. The price move of NGM12, the last couple of days, may have priced in some better expectations, but the Natural Gas market may be in the early stages of putting in a bottom.

NGM12 may have some resistance at the highs of today at 2.52 and then at 2.68. The market in the short term appears to be overbought based on several momentum studies, but we look for NGM12 to find initial support at 2.26-2.31 and solid support at 2.18-2.24.

March 27, 2012

Energy Trader, Van Commodities, Inc.

Year-over-year natural gas futures spot prices are about 45.0 percent lower. As a result of the lower prices, natural gas exploration is down 25.9 percent, and the number of rigs drilling for natural gas are down 11 from the prior week and 228 lower than last year's level of 880, according to the March 23, 2012 Baker Hughes Natural Gas Rig Count. The weekly drop in the rig count is the eleventh in a row and it leaves the count sitting at a 10-year low and 59% below its all-time high of 1,606, in the summer of 2008. Even with the reduction in the rig count, natural gas futures, basis the September 2012 contract (NGU12), still fell 2 cents today to $2.62 per 1,000 cubic feet after dropping 2 cents on Monday. The NGU12 contract is priced at slightly more than half of where it was trading at this time last year. Oversupply and mild winter weather have contributed to the continued weakness in natural gas.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

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