Are Natural Gas Prices Ready to Fire Up?
After falling below the $6 level last week, September Natural Gas futures have started to heat up, sparking a nearly 80-cent rally since lows were made on July 25th. Forecasts calling for above-normal temperatures in the Gas-consuming regions of the Midwest and East Coast through the middle of August have traders looking for increased Gas consumption to start to draw down record high supplies in storage. In addition, the National Hurricane Center is tracking a system near Bermuda that has the potential to become a tropical storm. The most recent Commitment of Traders report shows large non-commercial traders net short 113,384 contracts as of July 24th, and any sign of activity in the Atlantic storm season could spark a violent short-covering rally as these large traders rush to the exits.
Looking at the daily chart for September Natural Gas, we notice prices closing above the 20-day moving average for the first time since mid-June. The 14-day RSI has turned positive, with a reading of 59.58. Despite the recent rally, solid resistance still looms at the July 20th highs of 6.840, as well as the July 11th highs near 6.960. Support is found at 6.000 and again at the lows of 5.855. In early trade, September Natural Gas is trading at 6.673, up 0.174.
