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DAY TRADING TIPS

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Natural Gas was seen trading higher yesterday morning at MCX before the release of EIA report. It was shining in green since traders were expecting the EIA storage report to support prices.

The market seems to be oversold and the release of the EIA report allowed buyers to enter the market with confidence.

Weather outlook

According to NatGasWeather for January 24 to January 30, US might get a bit colder for few more days and with polar blast advancing through the Midwest will impact the temperature and we could expect cold days ahead. Overall, demand will be moderate today then high-very high Friday through Sunday.

Natural Gas storage report

Looking at mid-term weather, temperatures are expected to be colder around Feb 3rd, so we could expect a solidly bullish pattern through February 2-3, then becoming neutral to bearish.

Natural Gas EIA Storage report  


Overall, the EIA estimates for the week-ending January 18 indicated another week of below-average, deficit reducing withdrawals.

The range of expectations were wide with Bloomberg looking for a 155 Bcf draw with predictions ranging from minus 85 Bcf to minus 163 Bcf. Reuters looking for a 154 Bcf withdrawal. Its range of guesses were minus 130 Bcf to minus 166 Bcf. The ICE EIA Financial Weekly Index futures settled on Tuesday at minus 160 Bcf.

Natural Gas Inventories Decline More than Expected

The Energy Information Administration reported that working gas in storage was 2,370 Bcf as of Friday, January 18, 2019. This represents a net decrease of 163 Bcf from the previous week. Stocks declined more than expected and are 33 Bcf higher than they were at the same time last year and approximately 10% lower in price.

Natural Gas price prediction

Looking at the weather outlook and EIA report, we can expect NG futures to bounce but this rally will be limited. It is advisable to averse risk and follow strict stop loss.

With a medium term outlook, I would advise to create short position in Feb NG contract at 221and hold your position for target of 215-212 with stop loss of 230.

Intraday traders should look at buying position for short trade. One can expect a short rally today.

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