Natural gas and Crude Oil investing strategies for Feb’11: Generatebucks

As mentioned last Thursday after the release of EIA report that a rally is expected, we saw NG futures trading shining. The February NG future contract closed around 184 on MCX.

Natural Gas price chart -
Observing last week, Crude Oil prices were seen trading in red zone since market demand was expected to reduce. It started with European Union pointing towards impending global growth.

With fading optimism built around speedy solution to trade war, I expect the market to be slow and bearish this week. The US President Donald Trump has indicated that meeting Chinese President Xi Jinping when he’s in Asia at the end of the month may be too soon in terms of trade negotiations.

Natural Gas investing tips

Trend for natural gas is bearish and as mentioned on Thursday, we saw NG future price rallying this morning. Feb NG contract was seen trading at 190.

Prices are still under pressure to decrease in demand due to return in warmer temperatures. NG futures have been in an oversold zone and a rally has been long overdue.

Looking at short-term weather outlook, NatGasWeather for February 8 to February 14 is expecting moderate to slightly high weather. The demand will be high from Friday through Monday and then moderate for the rest of the week.

Price action – market is dominated by sellers. We can expect a profit booking rally but I don’t expect much upside. If you are planning to create a position, follow a sell on rise strategy. The current rally may continue but I see a strong resistance at 197-200 levels on MCX.

For short-term traders, crate a short position at 195 for target of 187-185 with stop loss of 201.

Intraday traders who plan to invest in the rally should be cautious since I don’t expect much upside.

Crude Oil investing

There are factors supporting Crude Oil prices but I don’t see much upside this week.  Opec along with its non-Opec partner are on track to implement the agreed cutback of 1.2 million barrels per day from its daily crude output, in an effort to manage the global supply glut and re-balance the market.

But factors such as growing US production, increase in consumption of Crude Oil in US and India, strong dollar index is building pressure on prices. Crude Oil prices have been holding support.

Based on the current fundamentals and trends, I would suggest a sideways trade in Crude. Buy on dips is a great strategy for short-term traders.

Buy around 3700 for target of 3850 in upcoming sessions with stop loss of 3650

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