FxWirePro: Natural gas short side target extended to $2.5

In a previous article, named, “FxWirePro: Fading winter changes natural gas outlook in medium term”, available at http://www.econotimes.com/ , we changed our bullish outlook in the medium term despite out call reaching two of the bullish targets; $3.1 and $3.7. In our bullish call, we had warned on the inventories which reached a record high of more than 4 trillion cubic feet. Winter wasn’t strong enough and as we feared that in such a case, inventories are weighing on the bulls as expected. In that article, we recommended to our readers of going short on natural gas at $3.14 per MMBtu and at rallies with a target around $2.7 per MMBtu. According to latest data from EIA, the inventory draws are slowing down and the working gas available in the underground storage is still at a high level of 2.445 trillion cubic feet.

The natural gas price is currently at $2.77 per MMBtu and we would like to extend our short side target or add another at $2.5 per MMBtu. We fear that increased natural gas production might push the prices even lower but we would remain cautious as this short call in the medium term collides with our longer term bullish call.