NATURAL GAS SHORT TERM VIEW (21ST JUNE 2012)
Warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.
Natural gas prices surged 14% on Thursday (14th June) on NYMEX, the largest one day gain in more than two years after the U.S. Energy Information Administration said that natural gas storage in the U.S. rose by 67 billion cubic feet last week, below market expectations for an increase of 75 billion cubic feet. The smaller-than-expected increase indicated that demand for the natural gas is better-than-expected and suggested that demand for natural gas among power utilities remains strong.
The weekly gas report has been bullish in nine of the past 10 weeks, now market players focusing to the U.S. energy Information Administration’s closely-watched weekly report on natural gas inventories scheduled for Thursday (21st June).
Early injection estimates for the storage report range from 47 billion cubic feet to 72 billion cubic feet, compared to last year’s build of 90 billion cubic feet.
On last Thursday (14th June) natural gas prices surged 11.85% on MCX. After touching a low of 121.40 on last Thursday (14th June) prices have made a high of 150.60 on 20th June. Here we are providing technical analysis for natural gas price with the help of last one month natural gas price chart.
1. NATURAL GAS FOUR HOUR PRICE MOVEMENT CANDLE CHART
In the above given natural gas price chart the run of natural gas since 14th June is very clear. From the last six trading days prices are moving in the range of 140-150 in between of two horizontal yellow lines on the chart, and currently (afternoon 21st June) trading at 145.50. Breakout of either side of these yellow lines will pave the way for natural gas price for the coming week movement.
2. NATURAL GAS DAILY PRICE MOVEMENT CANDLE CHART
In the above given daily chart natural gas prices are very bullish, prices are moving just above the 200 days EMA line that is 140.30 (yellow line moving with price). The green line at the bottom of the chart is showing the RSI level that is around 59 a bullish indication. Another red line in the chart just above the green RSI line is showing the direction of OBV (on balance volume), that is also bullish and has given a REVERSAL HEAD & SHOULDER PATTERN breakout means indicators also supporting prices run.
RECOMMANDATION- The thing that has to be watched is price breakout either side of the range of 140-150. Breakout above 150 at closing basis may give you level 160 within some trading session and breakout below 140 at closing basis may bring price down to the level of 132 and 127. Today (21st June) at 8:00 p.m. release of U.S. natural gas inventory data will be crucial to set the direction of natural gas prices.