FxWirePro: Natural gas prices might test $3 support as inventory weighs

Over the past week or so, many parts of the United States experienced severe cold. In Chicago, just two days ago, the temperature dropped to as low as -20 degrees centigrade, while the hottest has been just 4-degree centigrade past week. It has been so cold that people have been calling it “Chiberia”. Yet, the price of natural gas, one of the major fuel in electricity production, used to keep houses and corporations warm have failed to gain after reaching out next target at $3.75 per MMBtu. We, at FxWirePro, have been bullish on the natural gas, since the price was $2.6 per MMBtu and our long call has already reached two targets at $3.1 and at $3.75 per MMBtu. Two of our targets at $4.3 and $5.2 remain yet to be reached.

This year, underground storage inventory of natural gas hit new record high at 4,047 billion cubic feet on the week ending November 11th. Since then, in more than a month, inventories have declined by just 241 billion cubic feet, which isn’t impressive at all given the state of the weather and very high level of inventory. With just approximately, 13 weeks of winter left, the price of natural gas might have to wait for another heated summer to reach our levels.

Nevertheless, we remain bullish on the natural gas, from the fundamental point of view, however, would like to acknowledge that the price might drop to a low range of $3.2 to $2.8, before it rises again. The price is currently at $3.33 per MMBtu.