FxWirePro: Build additional/fresh longs in natural gas

We remain long in natural has both in the short term as well as the medium term, which is beyond this winter. This year the natural gas injection to the underground storage during the buildup period (April-October) has been at lowest in years. To give you an example, the growth in injection during this buildup period has been just 1.1 percent w/w compared to 4.7 percent in 2012. Even last year, the growth was more than triple of this year.

We recommended going long around $2.6 per MMBtu with the stop loss around $1.9 per MMBtu with targets at $3.1, $4.3 and $5.5 per MMBtu.

After reaching the first target and more, the natural gas has suffered a massive selloff. Price dropped from as high as $3.35 per MMBtu to $$2.82 per MMBtu. One of the major bearish factors that we have mentioned and warned our readers is that a very high level of inventory (close to record high). Still, we believe the call is good and will see this selloff as an opportunity to add positions or build fresh ones.

The call is still in the money and we recommend buying at these levels.