Commodity Trading Tips for Natural Gas by KediaCommodity

Ajay Kumar Kedia 28 May 2012

Natural-Gas Natural Gas yesterday traded with the negative node and settled -0.28% down at 145.3 as lower temperatures cooled demand for air conditioning fired by the fuel. Also, market participants believe that recent increases in demand from utilities switching to natural gas from coal may have hit a ceiling. While warm forecasts for the Northeast and Midwest for the long holiday weekend may have limited the downside, traders said the milder weather outlook for later next week raised the chance that demand for air conditioning would soon slow. The supply-demand balance for gas has tightened this year as record production seemed to slow slightly while demand got a big boost from more electric utilities switching from coal to cheaper gas to generate power. Despite declines in dry gas drilling and planned output cuts by several key producers, gas production, primarily from shale, is still flowing at near-record highs. Baker Hughes data on Friday showed the gas-directed rig count fell by six this week to a new 10-year low of 594, eclipsing the previous low of 598 hit two weeks ago. The near 37 percent drop in dry gas drilling since peaking at 936 in October has stirred talk that producers were finally getting serious about stemming the flood of supplies. Total U.S. natural gas storage stood at 2.744 trillion cubic feet as of last week. Stocks were 750 billion cubic feet higher than last year at this time and 753 billion cubic feet above the five-year average of 1.991 trillion cubic feet for this time of year. In yesterday's trading session natural gas has touched the low of 145.1 after opening at 145.6, and finally settled at 145.3. For today's session market is looking to take support at 144.8, a break below could see a test of 144.4 and where as resistance is now likely to be seen at 146, a move above could see prices testing 146.8.