Natural Gas Corner - Technical Update - A Retest of "Breakout" Resistance This Week?

The April 16 natural gas contract began last week’s trade with a sharp selloff on Monday and trended down in Thursday’s close finishing the session at 1.806.  For the holiday-shortened week, the contract was down .101 or 5.3%.

The 2-week rally which began at the 1.611 contract low set in early-March failed under trend line and 40 day moving average resistance at the 1.957 weekly high.  This resistance is currently at the 1.880-1.920 area and remains primary resistance. 

A breakout above lower-1.900 resistance would be a bullish signal for the market turning 2.017 into the next upside resistance.

The 1.766 overnight low extending down to 1.750 is the first area of support followed by 1.690-1.700 and the 1.611 contract low.

While the market may have one more leg higher on this current seasonal rally, the longer term outlook is for an eventual test of contract low support by the later-dated summer 2016 contracts.

Bottom line – The April contract may be ready for another retest of lower-1.900 “breakout” resistance in this  week’s trade.

The fund long position in the natural gas market jumped by nearly 50% in last week’s trade.  Friday’s Commitment of Trader’s report showed the fund long futures position as of 3/25 at 70,241 contracts, up 23,177 (49%) from the previous week.

Technical Indicators:  Moving Average Alignment – Bearish

                                         Long Term Trend Following Index – Bullish

                                         Short Term Trend Following Index - Bullish

Commitment of Trader's Report - Fund Long Position In Natural Gas Surges By Nearly 50%

The funds were quick to reenter the natural gas market it bottomed in early-March at a new 18-year low.

Friday's Commitment of Trader's report showed the funds long 70,241 natural gas contracts, up 23,177 (49%) from the previous week.

While the fund long position has increased, it remains well below position levels seen during previous rallies.  A lack of conviction, perhaps?  Rightly so, given the current bearish fundamentals.

MDA Earthsat 15 Day Outlook - Warm Outlook Nationally

EIA Weekly Storage Report - 15 Bcf Injection - Slightly Lower Than Expected

For the week ended March 18:

EIA Injection - 15 BCF
Last Year’s Draw – 4 BCF
5 Yr Avg Draw – 24 BCF

Range of Estimates – 14 BCF to 35 BCF
Avg Estimate – Injection of 22 BCF

Total Gas in Storage - 2.493 TCF

Natural Gas Corner - Morning Update

Dow Jones - Natural Gas Slips On Expecations of Early Supply Gains

DJ Natural Gas Slips on Expectations of Early Supply Gains

  By Christian Berthelsen

  Natural gas futures edged down Thursday ahead of weekly U.S. data expected to show an early-season increase in
natural gas supplies, thanks to robust production and weak demand at the end of a mild U.S. winter.

  Natural gas futures for April delivery were down 0.6% at $1.783 a million British thermal units on the New York
Mercantile Exchange. The market has retreated to two-week lows after an early start to spring drained the last
remaining hopes for gas-fired winter heating demand. The market lost 3.7% on Wednesday.

  Natural gas inventories are usually still declining at this time of year, as the last remains of winter drive heat
demand in U.S. homes and offices. But the early spring this year has analysts predicting a 22 billion cubic-foot
increase in supplies, though inventories usually fall by an average of 24 billion cubic feet at this time of year.

  The data is scheduled to be released at 10:30 a.m. EDT. If estimates prove correct, U.S. supplies will have reached
2.5 trillion cubic feet, a near-record, and 52% above average for this time of year.

  Shifts in weather forecasts are usually a key driver for the market, but as winter shifts to spring in so-called
shoulder season they play less of a role. The U.S. outlook remained about steady on Thursday, with a warm-up over the
eastern seaboard through the first days of April counter-balanced by a plunge below normal later into the month.

  "Production will need to see some accelerated decline if this market is to balance anytime soon," research
consultancy Ritterbusch and Associates said in a note.

  Write to Christian Berthelsen at christian.berthelsen@wsj.com

  (END) Dow Jones Newswires

  March 24, 2016 10:08 ET (14:08 GMT)

  Copyright (c) 2016 Dow Jones & Company, Inc.

032416 14:08 -- GMT
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Natural Gas Corner - Technical Update - Is The Rally Over?

An early rally attempt on Wednesday by the April 16 natural gas contract reached a 1.899 high, holding under key resistance at the lower-1.900 level.  With resistance holding for a third day time over the past week sellers came back in dropping the April contract to a 1.794 daily close losing .069 (3.7%) on the session.

Daily settle back under the 10 day moving average turns the near term trend back down but the rally may not yet be over.  The lower-1.900 area which includes a 3-month trend line and the 40 day moving is now key resistance followed by the 1.957 high set last week.

 A breakout above these two resistance areas would be a bullish signal for the market turning the 2015 low at 2.017 into the next upside resistance.

1.750 is the first area of support under the current 1.772 overnight low with longer term support at 1.690-1.700 and the 1.611 contract low.

Bottom line – Is the rally over?

Technical Indicators:  Moving Average Alignment – Bearish

                                         Long Term Trend Following Index – Bullish

                                         Short Term Trend Following Index - Bullish