There are seasonal aspects to the price of natural gas. Right now, natural gas utility companies are buying natural gas for the winter usage of their customers. Prices typically reach their lows about now, so utility companies take advantage of the opportunity to buy and increase their storage of this valuable commodity. This year, the price of natural gas topped out at around $13.75 in early July. Last year, the price of natural gas bottomed below $7.50 in late August '07, moving higher in the fall. It then dipped again and bottomed a second time in early December '07. We're only about 60 cents above that price now. The chart shows a continued downtrend, but the momentum is waning (see chart). In fact, the Klinger Volume indicator (lower panel) suggests that heavy buying is occurring. I will be watching over the next several weeks to position myself for a long trade in natural gas.Thursday, August 14, 2008
Looking to Go Long Natural Gas
There are seasonal aspects to the price of natural gas. Right now, natural gas utility companies are buying natural gas for the winter usage of their customers. Prices typically reach their lows about now, so utility companies take advantage of the opportunity to buy and increase their storage of this valuable commodity. This year, the price of natural gas topped out at around $13.75 in early July. Last year, the price of natural gas bottomed below $7.50 in late August '07, moving higher in the fall. It then dipped again and bottomed a second time in early December '07. We're only about 60 cents above that price now. The chart shows a continued downtrend, but the momentum is waning (see chart). In fact, the Klinger Volume indicator (lower panel) suggests that heavy buying is occurring. I will be watching over the next several weeks to position myself for a long trade in natural gas.
