Two failed early week rally attempts in the natural gas market lead to capitulation selling today as the spot August contract fell by 2.6%.
An important area of support was reached to at the 2.655 low which is the exact level for the 40 day moving average. There has not been a single daily close under this average since the most recent rally began in late-May.
The reason this technical support level is mentioned is because a drop under it tomorrow could lead to further liquidation selling by the hedge funds. It could also indicate a summer price high has been set.
On the table for tomorrow is the EIA weekly storage report which at an expected 38 Bcf injection would be the 10th consecutive weekly storage number that comes in under the 5-year average.
But as mentioned in a previous posting, even with the extreme heat and record high weather-related power demand, storage is still on course to near and possibly exceed last year's record high 4,009 Bcf by the end of the year.
An important day tomorrow both technically and fundamentally. If the storage number comes in higher than expected as it did next week, it could quickly get ugly for the bulls.
ENERGY :
ReplyDeleteCrude Oil April and Brent Oil May series are down 0.4 percent $ 53 and $ 56 a barrel, respectively.
Natural Gas April expiry is trading on a strong note, up over 3 percent to $ 2.912.capitalstars