Update after Inventory Report: Range $4.34-$4.48
Nat Gas prices up 10% in five sessions reached the highest level since Feb 4 as cold weather forecasts added to the bullish scenario. The EIA storage report showed a minor draw of 6 bcf which should continue with colder weather. Technicians see an upside potential to $4.54 level.
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The Nat Gas rally has legs as the media has begun extolling the merits and abundance of this versatile fuel against the backdrop of the nuclear energy disaster. Nat Gas bottomed at the $3.80 level in early March.The January high price was $4.80 when cold weather was the driver. The new ideas catching hold for higher nat gas prices in the intermediate term are:
- Better economy and need for more energy.
- Greater demand from Japan.
- Higher oil prices pulling nat gas up.
- Fracking process can cause water pollution so concerns hold back shale mining.
Technicians think the commodity is overbought and prices can pull back to the $4.30 level. But longer term this theme has strength and maybe the Obama administration would consider changes in energy policy (if it weren’t overbooked with the Middle East and the economy) like adding nat gas and dropping the “burn the food” program with corn-based ethanol.