I think gas will go to $5.00 this fall--Anybody agree? Disagree?
N.Y. Natural Gas Futures Moving Toward $5: Technical Analysis
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By Reg Curren
June 29 (Bloomberg) -- Natural gas futures are heading toward $5 per million British thermal units as price support builds for the power-plant and industrial fuel, according to a technical analysis by Chris Jarvis, president of Caprock Risk Management LLC.
The futures contract has rallied and retreated three times since dropping to $3.155 per million Btu on April 27, the lowest in more than six years. Gas now has established a support line that may push prices into a range of $5 to $5.20, Jarvis said in a telephone interview.
“Natural gas could be coiling for a move higher,” said Jarvis, who is based in Hampton Falls, New Hampshire, and is a chartered market technician. “The $3.60-to-$3.80 area has been a big area of support and we’re holding that again. The longer we stay down here, to me, the bigger the upside move.”
Jarvis said gas will have to break through an area of resistance at $4.38 and then $4.575, the latter of which was a three-month high reached on May 13, before reaching his target price this summer.
Natural gas for July delivery rose 10.5 cents, or 2.7 percent, to $3.949 per million Btu on June 26, its last day of trading on the New York Mercantile Exchange. Prices are down 71 percent since reaching a 2008 high of $13.694 per million Btu on July 2.
Moving averages, an indicator watched by some technical traders, also appear set to turn higher, another bullish signal for natural gas, Jarvis said. Gas last week closed above the 50- day average, which has reached about $3.84 per million Btu.
“The 50-day moving average is starting to turn up and the 100-day is starting to make that same move,” he said.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals. The moving average shows the average value of a security or commodity over time.
Share | Email | Print | A A A
By Reg Curren
June 29 (Bloomberg) -- Natural gas futures are heading toward $5 per million British thermal units as price support builds for the power-plant and industrial fuel, according to a technical analysis by Chris Jarvis, president of Caprock Risk Management LLC.
The futures contract has rallied and retreated three times since dropping to $3.155 per million Btu on April 27, the lowest in more than six years. Gas now has established a support line that may push prices into a range of $5 to $5.20, Jarvis said in a telephone interview.
“Natural gas could be coiling for a move higher,” said Jarvis, who is based in Hampton Falls, New Hampshire, and is a chartered market technician. “The $3.60-to-$3.80 area has been a big area of support and we’re holding that again. The longer we stay down here, to me, the bigger the upside move.”
Jarvis said gas will have to break through an area of resistance at $4.38 and then $4.575, the latter of which was a three-month high reached on May 13, before reaching his target price this summer.
Natural gas for July delivery rose 10.5 cents, or 2.7 percent, to $3.949 per million Btu on June 26, its last day of trading on the New York Mercantile Exchange. Prices are down 71 percent since reaching a 2008 high of $13.694 per million Btu on July 2.
Moving averages, an indicator watched by some technical traders, also appear set to turn higher, another bullish signal for natural gas, Jarvis said. Gas last week closed above the 50- day average, which has reached about $3.84 per million Btu.
“The 50-day moving average is starting to turn up and the 100-day is starting to make that same move,” he said.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals. The moving average shows the average value of a security or commodity over time.
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Replies to This Discussion
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Permalink Reply by Jon Williamson on
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Agree!
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Permalink Reply by Skip Peel - Mineral Consultant on
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You must be expecting a really cold and early winter, Jay. LOL! I hope you are correct (about the price, not the winter) but I will disagree. I suspect that the economy will be the deciding factor and I do not expect it will improve sufficiently to support $5 gas in the Fall.
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Permalink Reply by The_Baron on
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Without an increase in industrial demand, I would be suprised to see any increase in price. In fact, unless some natural disaster strikes, I predict prices may even fall lower. Just look at last weeks storage numbers.
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Permalink Reply by The_Baron on
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The nat. gas market follows two rules: It never makes sense and it never stays the the same.
The traders have to trade. All we can do is hold on and hope for the best.
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Permalink Reply by Scott on
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I agree with you ShaleGeo. I think we're on our way. It does seem as of lately we have found that level of support Chris Jarvis mentioned above. Just hope these injection numbers continue to shrink as each week passes and the gas rigs continue to get cut.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Agreed. But what will be the affect of the nat gas in storage? How significant is the present supply?
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Permalink Reply by MB on -
KB, right. All you have to do is look at/track it. ...Markets are discounting mechanisms. They're not always right, but are usually a good indication of what's coming. Best
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Permalink Reply by Mattie on
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I've traded NG for many years now, and if I had a crystal ball on where prices are going in the next year, I'd be much better off financially for sure. My educated guess is that gas will bottom later in the summer and early fall due to high storage levels nationwide. The only thing that could possibly turn the market bullish earlier is a devastating hurricane similar to Katrina or Ike that knocks out most offshore and coastal production -or- another war or threat of war......even then, I'm bearish on NG until mid-to-late 2010 (at best). I am guessing we'll see $3.50 NYMEX before we see $5.00 NYMEX. While that might seem easy to predict since we're slightly under $4.00 presently, it's hard for the floor to be set much lower due to base cost to produce. We may see $5.00 by Nov or Dec (in preparation for the winter) IF we have a bold prediction from the weather experts of a longer, colder winter. Absent that, we will suffer with these prices for some time. NYMEX may hit $5.00, but cash market (Gas Dailies) will suffer......no room in storage. Wide cash basis will likely prevail regardless of the NYMEX in early Fall period.
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