Yesterday was a swingin, Up-N-Down day for natural gas. See the Updata ‘Candlestick-Volume’ chart for the CME/NYMEX May contract below, that shows upticks in gray, downticks in red, with the width of the bar proportional to the volume during that trading period. So there was a big move up on the open, it was pounded down during the morning session on relatively consistent volume, then drifted back up before closing above the two dollar mark at $2.016, up 3.5 cnts. The futures market spent 3 days below $2.00 this time around. Yes, I’m suggesting that we have not seen the last of one-handle prices. For reference, cash markets didn’t seem so enthusiastic with the ICE prompt cash Henry Hub index languishing back at $1.88/MMbtu, up a penny.
But regardless of my generally bearish tendencies this Spring, you can’t ignore the bullish mojo in the natural gas market right now. Today two of our contributors have provided their two cents on the state of the market, and both are in the bullish camp. Kyle Cooper’s look at the fundamentals concludes that last week’s temperature adjusted supply/demand suggests that the market is coming more into balance. Kyle’s numbers look at the supply/demand picture adjusted for the kind of weather we are having this year, and he concludes that we are burning through a disproportionate volume of gas. By far the most important factor in the equation is gas fired power generation, which might just keep the natural gas market from running out of storage capacity before this injection season is over with. But it still will be dicey. See Kyle’s analysis in No Bull, Natgas Looking Slightly Bullish.
Contributor Willis Bennett comes at the market from a completely different perspective but also ends up bullish. He is looking at a measure of price volatility called Average True Range, which is signaling that the market is wound up like a coiled spring and could be ready to bounce. Willis explains how this works in Natgas Average True Range Signals Upside Reversal.
How do we pull this all together? Well, there is still a lot of gas out there. Gas producers continue to pour on the coals, so to speak. A lot of things must go right to avoid a storage capacity problem in the fall. But it does look like the market may be bouncing up for a while. Whether this is one of those dead cat bounces referenced here back in January, we’ll just have to wait and see.
And one final note. As an equal opportunity blogger, I provide a link to Britney Spears with her rendition of that classic, Up N Down.
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