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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Patience The Necessary Virtue In The Futures Markets

Natural Gas Outlook

Natural Gas futures are proving to be one of the more interesting markets in early 2015. The first several days of the new year have seen the market drop to a 52-week low while at the same time the high demand areas of the country are getting hit with the coldest weather this winter. 

Although speculators may be trying to bid this market higher, short-sellers have failed to budge on this increased buying. This is a strong indication that the major players are counting on the current overproduction to continue and that the current cold weather snap will not turn into last year’s lingering pattern.

At the start of the winter season, working gas in storage was below the five-year average due to the polar vortex weather conditions in the winter of 2013-14. The lack of lingering cold weather during the current winter season has led to below average withdrawals, driving the working gas closer to its five-year average.

The conclusion that can be reached is that after this current cold snap and with continued production levels, prices may slide to the $2.50 to 2.40 price zone. According to the latest government Short-Term Energy Outlook Report published on December 9, “U.S. gas production may advance 5.5 percent this year to a record 74.26 billion cubic feet a day”. Since production is expected to increase, natural gas can very easily hit the target zone even before winter is officially over in March.

The…

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