March Natural Gas is up 18.6 cents at $5.872 this morning as I write. Prices are higher today as some forecasters are predicting that more wintry weather is ahead into the middle part of January. It is interesting to note that most of the delivery months out two years or more are all within 10 cents of their contract lows. So, near term prices are concerned about near term cold weather. Longer term markets still see an over burdensome supply situation into the future. I believe that the longer term contracts won’t enter into a long term bull move until it becomes more clear that Congress will pass an energy bill that includes incentives for natural gas use, industrial demand picks up and the amount of supply coming online slow down. Longer term players know that until these things happen, this current cold wave will need to show much below normal temperatures for the next couple months consistently to work off 700 billion extra cubic feet of supply in the pipelines to simply get back to normal supplies. That is a tall order for the weather to pull off. Regardless of those fundamentals, I can’t ignore what the charts are saying. Right now, the weekly charts are looking more and more bullish in their shape. The daily chart is trading and struggling with the 200 day moving average and still about 30 cents below the November price highs. A close above the November price highs would begin to change the cycle from lower highs and lower lows to our first new weekly higher high in a low time. That would be the first sign of a market attempting to put in a long term low. We shall watch and see. For now, stand aside.
David Hall
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