FxWirePro: Natural gas decline may extend to $2.15 per Mmbtu area

In our previous article, named “FxWirePro: Buy natural gas at dips; target $4.3 per Mmbtu” available here, http://www.econotimes.com/FxWirePro-Buy-natural-gas-at-dips-target-$43-per-MMbtu-234576 we suggested buying natural gas at dips and forecasted that the price might find support around $2.5 area.

While we maintain our bullish outlook for the natural gas, we expect it could decline much more than originally thought. We have started seeing some signs of prices going up in some parts of the world, especially in the United Kingdom. Despite this, we now see that inventories which are now higher than 5-year average likely to weigh on price more than initially thought. Storage stocks are currently at 3.24 trillion cubic feet, compared to 5-year average of 2.66 trillion and 2.74 trillion cubic feet last year.

We are now revising our base from current $2.5 per Mmbtu area to $2.2-2.15 per Mmbtu area. We maintain our stop loss around $1.9 per Mmbtu area.