End of May Natural Gas Update

Natural Gas Update 05-28-2013

Where oh where is this going to stop?

For the ninth straight trading day, the market reached a higher high of $4.295. However June futures could not sustain itself and eventually settled lower at $4.237. The June contract will expire next Wednesday. So now it seems clear that the market wants to retest the breakdown area from the reversal week ($4.31-$4.36) which is fine except one small issue - the June contract expires in three days and that means that all this bullishness, based upon weather forecasts, has to survive the three day weekend. We believe that there will not be a meltdown like the $.30 move three weeks ago - expect more of a slow but continuous decline off of whatever high this market trades to in the near term. We still believe that the Q2 high is already in at $4.444.

 

Now, one item of note concerning the historical seasonal weakness that occurs around the Memorial Day holiday weekend.  In the last 8 years the weakness has bottomed within 10 days seven times, within 6 days six times and within 3 days 5 times. It can be in front of or after the holiday but around it. Keep that in mind with what seems to be a non-stop bullish rally over the past two weeks.

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