On fundamental side, mild weather in US expected to continue for coming 2 weeks & will put more pressure on prices. On other hand current inventory level of natural gas is 3432 bcf which is down by 400bcf compare to 5 year average. Inventory forecast for this week is -51 while 5 year average withdrawal is -17. These inventory level might help natural gas prices to hold above current year low.
Now natural gas is trading around $3.772 & as we can see on charts, natural gas once again came below the long term descending trendline running from 2013 high of $5.475. Technical picture suggest for more downside move towards previously broken support & then towards 2014 low at $3.611. However the associated with this move is quite low & thus this move could be temporary.
Mcx natural gas trading at 235.50 mark while i am writing. Mcx natural gas has almost same story , keep falling after putting a temporary high of 281 while falling continue on mild weather forecast. From technical aspect break below support trendline & 61.8% suggest for more weakness ahead. Most possibly natural gas can fill the contract gap ( 229-223.5) on charts. It will be very interesting to watch when the gap will be filled & winter will arrive again.
Based on above studies, we will prefer to sell natural gas on some rise for mention downside targets in coming trading session.
Note - Above is not a buy/sell recommendation.
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