The SMC Report – Natural Gas

April 8, 2019 3:54 pm
Published by

This Week’s Market Comments:

In our seasonal approach to the market, we break the year down into 4 seasonal periods.   We have actually concluded the normal January-March winter period in which market decline is the predominate tendency.  However, a final winter decline can sometimes extend into early April with key fundamentals that are trending bearishly.  We appear to be having that situation this year and so we are still considering our late winter seasonal decline to be in progress.  Other than going somewhat beyond the end of March, the winter seasonal movement has played out within our original general expectations for an initial, large upward market swing on a return to cold, arctic weather followed by an eventual large downward swing that would conclude our anticipated large winter swings in either late February or March.

The question this week, continues to be whether this final attempt to extend our low beyond $2.543 will be successful.  News coming into the market last week was very bearish with a storage build that notably exceeded expectations and an outlook that indicates that the sizeable year-over-year storage deficit of 359 Bcf’s from March 8th will most likely be eliminated by April 19th (with a surplus accumulating thereafter).  With such bearish news unable to extend the low more than another 2-cents to $2.632 and considering seasonal timing,  it is beginning to appear that this final attempt lower may come up short of seriously challenging $2.543.  Basically, history tells us that when we see the market struggling to continue lower at a time when a seasonal low is historically likely, an upside reversal can be just around the corner.

As to the coming week, the NYMEX natural gas futures market is currently resting about 2/10’s of a cent above the previous week at $2.664 after a week where it continued its recent pattern of trying the upside early in the week and then falling back to extend the our final winter decline somewhat lower late in the week.  However, this last week, we did not quite see a lower close from the week before.  With fundamentals still trending bearishly but seasonal tendencies favoring an upside reversal at any time, we think we will need to see the market resuming some downward momentum quite quickly or we will see the market reverse to the upside by breaking above last week’s high of $2.733.

Much more detail on projected price level and timing of market movement for our entire January-March winter season is included in our weekly SMC Natural Gas publication.  Our publication can be sampled by contacting (501) 240-6700 or SMCnatgas@aol.com.

Bio of SMC natural gas advisory service:

SMC is registered with the Commodity Futures Trading Commission ("CFTC") as a Commodity Trading Advisor ("CTA"), and as such, it has had the ability to trade speculatively for others and to provide advice to outside entities in regard to movement in NYMEX natural gas futures.  At this time, SMC is solely engaged in the latter activity.    

SMC was incorporated in 1988 and business endeavors have included founding, growing, and selling a natural gas marketing company, speculative futures trading, and, since 2003, a natural gas futures advisory service specializing in upcoming market movement.  All endeavors with SMC have been successful with speculative proprietary trading activity especially so.  As such, SMC market perspective and advice is backed with a successful track record in natural gas futures that began in 1991.  Please feel free to call or email SMC with inquiries or questions at (501) 240-6700 or SMCnatgas@aol.com

    Subscribe to be notified when this post is updated!

    ---

    This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.

    ---

    This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.

    This post was written by Louis Rose