Commodity Trading Tips for Natural Gas by KediaCommodity

Ajay Kumar Kedia 17 June 2014

Naturalgas settled down -0.25% at 284 slipped after forecasts for just a short burst of hot weather brought futures down from a 3 1/2-month intraday high. Futures started the U.S. trading day in positive territory amid forecasts for hotter temperatures in the Midwest and Mid-Atlantic region this week. According to Natgasweather.com, highs will be in the upper 80s Fahrenheit to lower 90s by Tuesday in many highly populated Eastern U.S. cities. Hot weather tends to stoke natural-gas demand, as electricity producers use more of the fuel to supply air conditioners. Traders started to lock in profits when gas futures hit $4.886, the highest intraday level since Feb. 26. At the end of February, natural-gas prices plummeted from five-year highs as an unusually harsh Northern Hemisphere winter was winding down, signaling the end of a period of record gas demand. Updated weather forecasts also revealed that elevated temperatures would only last for a few days, adding to the downward pressure. Also Gas stockpiles are now 35% below average for this time of year, based on the most recent data from the U.S. EIA. Meanwhile, market players kept an eye out towards Thursday's U.S. supply report. Utilities added 107bcf of gas into storage in the week ending June 6, below forecasts for an increase of 110bcf. Total U.S. natural gas storage stood at 1.606tcf as of last week, nearly 31% below their level this time last year and 35% below the five-year average. Producers would need to add approximately 2.6tcf to storage by November 1 to meet typical winter demand. Technically market is under long liquidation and getting support at 280.5 and below same could see a test of 277 level, And resistance is now likely to be seen at 288.1, a move above could see prices testing 292.2.