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 Les Bamburg on
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Jay, come September there is going to be 13 Bcfd of natural gas no longer going into storage plus 2-3 Bcfd of extra LNG hitting the US shores. Given we will be in the shoulder months for natural gas demand, pricing could get really ugly.
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Permalink Reply by Les Bamburg on
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KB, the good news - in the longer term the economies will recover and natural gas will be a larger portion of the energy supply worldwide. This should lead to plenty of demand at reasonably good long term prices. We just have to endure lower natural gas prices for the next couple of years.
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Permalink Reply by The_Baron on
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Don't hold your breath, it took AEP years to just break ground on the new power plant here in shreveport.
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Permalink Reply by Grillin' - MmmMmm on
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While I'd love for it to hit $5, I'm just not getting a good feeling. Too much gas. We are over-producing demand by roughly 3 BCF/day and storage will fill pretty soon. Then where does the gas go?
It may touch $5 for a little while but my money is average of $4.50 or less through November. Long term, I'm guessing in the next few years, we'll settle in at $7 or $7.50. Cost of Supply curves show that to be the long term (2020 view) pricing point for incremental gas.
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Permalink Reply by The_Baron on
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The long term affordability of gas is what T. Boone has been saying for some time.
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Permalink Reply by Les Bamburg on
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KB, between the coal interests and certain environmentalists (not all) natural gas gets hammered from both sides.
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Permalink Reply by king john on -
Les, what is the enviromental dis-advantage w/ NG ?
the other day i thought we established NG was in line with a carbon re-capture facility in terms of the emissions ?
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Permalink Reply by Les Bamburg on
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KJ, some enviros don't like any fossil fuel as they see it's development as impeding increased usage of renewables.
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Permalink Reply by MB on
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Mmmarkkk,
One option few consider: What if we get an inflationary global economic boom and emerging economies lead the way?
Best
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Permalink Reply by ALongview on
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The inflationary scenerio is a very likely one. The Govt. basically has two choices: inflation or depression. More money will be created out of thin air to pay for the stimulus type projects as well as to try to keep rates low until we get out of this funk. This will lead to inflation. As energy has always done well in the past in inflationary environments and the global nature of today's economies it should do well here also. The other option is for the Fed to tighten the money supply to keep inflation in check. This will have in my opinion catostrophic implications and lead to the demise of the US economy and plunge it into a depression like we have never seen before. Seems like a simple choice but only time will tell.
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Permalink Reply by Dorcheated A1 on
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Blah, blah, blah....... Bush this, Bush that. The same old song and dance.
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