Natural Gas Price/Volume Converging, Fundamentals

Here's a look at the Natural Gas 2009 June (NGM9) and July (NGN9) future and $UNG (Natural Gas ETF). Look how volume has been converging with price on each security. The June future pierced through near term downtrend resistance and could head toward the $3.75 - $3.98 range (50 day moving average resistance) if it can follow through. Natural Gas is still in a long term downtrend but should be monitored for relief rallies or a structural reversal. As you can see from all of the charts below natty gas failed to break out on multiple occasions so stops and/or protection are mandatory imo (for example).

As for fundamentals, working gas in storage is at a very high level (chart at bottom) and rig count is declining, however according to Baker Hughes the decline slowed down a bit last week. We'll see if that trend sticks. I'm trying to hunt for the bottom here. Supply/demand tightening or hurricane anticipation could bring some volatility going forward. I also provided the April 30 AGO Natural Gas Update via Scribd and a bearish article: Natural gas prices on the verge of a deeper slide (Purchasing.com).


Natural Gas June Future (NGM9) (Optionsxpress)


Natural Gas July Future (NGN9) (Optionsxpress)


Natural Gas ETF (UNG)


Working Gas In Storage vs. 5 Year Average (eia.doe.gov)


This PDF document can be found at AGA.org

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