DJ Natural Gas Shoots up on Technical Trade
By Timothy Puko
Natural-gas prices surged to a new four-month high after futures surpassed an important technical level and
forecasts warmed for one of the country's biggest markets for demand.
Natural gas for July delivery is up 9 cents, or 4.2%, at $2.259 a million British thermal units on the New York
Mercantile Exchange. That would be one of the biggest percentage gains in the last month. Front-month prices are now up
15% since the June contract expired Thursday at just $1.963/mmBtu.
July's contract hasn't traded below $2/mmBtu since early March, and summer prices are often higher because of
increasing demand for gas-fired power to run air conditioners. Weather updates for mid-June are showing warmer
temperatures in the southeast than Friday's updates before the three-day weekend, and that strengthens demand
expectations in the biggest region for gas-fired power, according to analysts.
But gas may be getting a bigger boost from technical traders that move on price momentum, a broker and trader
said. Prices moved above their 200-day moving average Tuesday for the first time since November 2014, which appeared to
trigger a lot of buy orders, they said. Nearly half the gains came just at 9 a.m. ET, the traditional start of U.S.
trading hours when volume usually increases dramatically.
That 200-day moving average is a widely-watched trigger for technical traders to close out bearish positions or
add to bullish positions. It covers a broad period of time, so if prices can stay above it, technical traders see it as
a major indicator the market sentiment has changed.
"If it stays above there it's significant. Then you can make a case the market is bullish," said Scott Gettleman,
an independent trader in New York.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
May 31, 2016 11:34 ET (15:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
053116 15:34 -- GMT
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