After falling to a new all-time price low in many of the forward strips on Monday, natural gas prices have been treading water in following trade.
The market remains weak as it enters into the post-winter “shoulder” season between winter heating and summer cooling demand.
Previous posts have shown the bearish triangle patterns initiated last Thursday which point toward lower prices near term. For the summer 15 strip (May 15-October 15), the downside measuring objective for the triangle is for trade to the 2.400 level.
It is important to remember that triangle patterns appear near the end of a price trend. Current weakness should be the final sell off for this downtrend and could possibly mark a multi-year price low for the market similar to 2012 when a triangle also formed near the price low.
One supportive feature for the market has been record large power generator demand for natural gas during January and February 2015. Daily demand of 23.1 Bcf has been 3.6 Bcf per day or 18.5% above the 5-year average.
The combination of increase power generator and industrial demand this year might be enough to offset record high production which has been the primary catalyst toward lower prices this winter.
The natural gas market could be ready to begin a new bull market in late-2015.
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