Natural Gas Facts
The following information about Natural gas was collected and forwarded to me from Stephen Beilby, and to him I say “Thanks!” “Statements gathered from many sources, here is why nat gas is choppy and can't seem to rise in this winter environment: “1) Estimates are for 200 Billion cubic feet draw on storage report this Friday due to the current nationwide cold snap that is coming to an end - frozen wellheads contributed to supply problem. “2) Cold snap ending takes pressure off rising prices. “3) Rise in price has brought more wells online, highest number since last April. “4) Seasonal trends are in a ‘selling off’ time. “5) COT reports show overbought - vulnerable to small speculator liquidation if support levels are violated. “6) Technical signals show crossing down in Moving Average tech signals, but several of the other signals like RSI, MACD, and Stochastics are showing oversold in certain timeframes, but not all of them yet. “7) Industrial demand has not picked up yet. “8) Support seems to be at 5.31 now. “And, finally, 9) predators, ‘snakes in the grass’ (my terms for them), seem to want to hunt for stops in the downward direction the past couple days - will they become exhausted soon at these levels?” In addressing these facts the following thoughts came to my mind: Estimates are always wrong, high and low, but rarely are they on target. This may not be the last cold snap for the entire nation, and the big Natural Gas traders have their own meteorologists to give the at least two weeks out guestimates on upcoming weather. Placing wells on-line takes time, and they were shut down once before for oversupply. In a downtrend, when Commercials add to their short positions, we sell. Seasonal trends were off in 2009 more than in many years, but they bear watching. Predators rarely tire of making money. You've heard "trade with the trend?" That’s one of the fastest ways I know of to get it to reverse. All kidding aside, the market has more room to the downside, and I want to take advantage if it goes there. In order to get Natural Gas to reverse and move up, what is needed is a prolonged winter (one you expect with global warming). A winter like 1978 that makes a 10” snowfall in Dallas look like child’s play; freezes all along the Eastern Seaboard down to Cuba; one where you can’t find Chicago due to the snow; and Mexico City is under a winter advisory; that sort of thing.
