Natural Gas Futures at a Crossroad in Early Uptrend

Natural gas futures is attempting a rebound from its two-week lows with traders now looking for fresh data on weekly gas inventories to have a better outlook on its demand. July natural gas futures are currently “unchanged” from yesterday’s close (near $2.85 per BTU) after a .05 cent rally earlier in the trading session at New York’s Mercantile Exchange.

Natural gas futures put in a monthly low near $2.79 and followed with a May high near $3.15 per BTU at the beginning of last week. The current uptrend in this market may be a little premature based on the weak demand and favorable weather in the near future.

Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, shared his view regarding the fundamental assessment of the natural gas futures market by stating, This time of year usually sees the weakest demand for natural gas as winter demand has passed and high temperatures for air-conditioning haven’t yet arrived.” Plotkin added, Even though weather models show ‘slightly warmer than average’ temperatures across the country over the next week and a half, to me its just not enough to kick-in demand.”

Natural gas futures began an early uptrend in the second week of May, but taking out yesterday’s low of $2.818 can change the directional outlook (in my work). I think US consumers are still very much benefiting with low natural gas prices.

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