FxWirePro: Natural gas outlook changed from bearish to very bearish

In an article published on June 2nd, named, “FxWirePro: Bears win in Natural gas; ready to push towards $2.68 per MMBtu”, available at http://www.econotimes.com/FxWirePro-Bears-win-in-Natural-gas-ready-to-push-towards-268-per-MMBtu-740965 , we recommended selling natural gas at the then current price around $3.02 per MMBtu with a target around $2.68 per MMBtu. Since then natural gas has declined steadily to reach as low as $2.75 per MMBtu.

In this article, we would like to upgrade our natural gas outlook from ‘bearish’ to ‘very bearish’ and would recommend our readers to continue with the short positions. We expect the price to take a dip towards the key support around $2.52 per MMBtu through the course of the year and move even lower. While the growth in the US production of natural gas might slow down, the bearish push is likely to come from increased global production mainly in Russia and in the Middle East.

Technically speaking, U.S. natural gas is in the process of forming a bearish head and shoulder pattern and we expect any bullish correction in natural gas to remain capped under $3 per MMBtu. Natural gas is currently trading at $2.82 per MMBtu.