Medium term
Trade view / 14 October 2016 at 13:09 GMT

Storage data lights up natural gas

Managing Partner / Spotlight Group
United Kingdom
Background 

Natural gas futures have held ground this morning following a sharp gain of over 4% yesterday on data that showed that natural gas supplies in storage in the US rose less than expected last week.

The US Energy Information Administration (EIA) said in its weekly report that natural gas storage in the rose by 79 billion cubic feet in the week ended October 7. This was under the expected level 87 billion cubic feet.

That compared with a gain of 80 billion cubic feet in the preceding week, 97 billion a year earlier and a five-year average build of 92 billion cubic feet.

Natural gas futures have made a good recovery in recent months since hitting a 20-year low of USD1.611/Mm BTU in early March. An unusually warm summer helped trim a supply surplus that was weighing on prices.
Nat Gas
Source: www.investing.com, Spotlight ideas

Nat Gas Time Techs Source: www.investing.com, Spotlight ideas

The technical aspect of the market is biased toward buying although there is one short-term area where selling pressure may just force a little profit taking back to the 3.25 territory.

I would look to buy natural gas, for even if prices do wobble a little lower at the opening, I am minded of the onset of the northern hemisphere autumn / winter season and a need for home and office heating.

Natural Gas Five-Year Chart: 
Nat Gas
Source: www.investing.com

Management and risk:

Parameters: Natural Gas November 16 (NGX6)  Be ready to roll to NGZ6
Entry: Buy 3.352 v12:24 GMT (USD/Mm BTU)
Targets: 3.40 ... 3.82 ... 4.25 ...4.51
Stop: 2.87
Time horizon: medium-term

— Edited by Clemens Bomsdorf

Non-independent investment research disclaimer applies. Read more
18 October
vanita vanita
Dear Steve,
Great call Steve .
You are awesum👍👍👍👍
19 October
ChristianK ChristianK
Dear Stephen. Does it still make sense to get into this trade? The market has been a bit up and down. I wonder if I should wait till the December contract is out next week? Thx
19 October
Stephen Pope Stephen Pope
Dear ChristianK,

The technical aspect this morning is not encouraging. All measures are reading as a Sell or Strong Sell until one gets to the Daily or longer...then they are Strong Buy.

Given the closeness of the volume in the contracts.. Nov 4150 and Dec 3280... I would suggest waiting until the end of the sesssion and if a dip has been booked on the day, consider acquiring the Dec...I will roll very soon and see limited reason to be in the Nov...especially as a new entrant.
19 October
ChristianK ChristianK
Got it. Thanks very much
20 October
SvsG SvsG
Hi Stephen, what is your view on the stop-loss level for the December contract
20 October
Stephen Pope Stephen Pope
Dear SvsG,

As at close,

Month Last Chg. Open High Low Volume Time
Cash 3.140s -0.080 0.000 3.140 3.140 0 10/19/16
Nov 16 3.121 -0.049 3.173 3.201 3.101 154434 15:59
Dec 16 3.425 -0.009 3.444 3.466 3.388 95094 15:59

In the short-term I would see Dec stop loss at 3.16 and on a slightly longer time perspective down to 2.47.

Steve

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail