March Natural Gas is down 1.8 cents at $5.796 this morning as I write. The included chart shows that March natural gas is still involved in a near term uptrend, although prices have been stalling up here in the $6.00 area, about 20 cents shy of the October highs. Cold weather is and has been the driver of this current rally. The cold weather is expected to hang around through January 10th according to forecasters. Natural gas prices are starting to act like they have already discounted that weather forecast. Also, keep in mind that cold weather alone won’t hold up the natural gas market. We will need to see temperatures that are below the normally cold temperatures for this time of the year to really dig into the oversupplied natural gas market. Normally seasonally cold temperatures won’t cut it. It is also interesting to note that the far out delivery months, a couple years out, are all within about 10 cents of their contract lows, giving more confirmation that this current near term rally is only cold weather driven. For a long term trend to develop, we need to see industrial demand rise and production fall off a bit further. As mentioned yesterday, I expect prices to fall again but not necessarily make any new lows. This will all be a part of a long term basing process in natural gas that may take weeks or months to complete. For now, stand aside.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
