Natural Gas Price Prediction – Prices Whipsaw and then Rally Nearly 5%

Natural gas prices whipsawed initially moving lower on Monday and then surging higher into the close. Tomorrow is the last trading day of the May contract. The June contract is trading at a 10-cent premium. This came following a report from the Commodity Futures Trading Commission that showed that hedge funds increased long positions and reduce short positions. The weather is expected to remain much colder than normal throughout the east coast for the next 2-weeks while remaining warmer than normal throughout the west and the south.

Technical Analysis

Natural gas price whipsawed initially declining by 5% and then surging to close the session up 4.7%. Prices recaptured short-term resistance near the 50-day moving average at 1.79 which is seen as support. Target resistance on natural gas is seen near the April highs at 1.97. The 10-day moving average is poised to cross above the 50-day moving average which would mean that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is also positive as the MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Hedge funds Reduce Short Exposure

Managed money reduced short position and increased long position in futures and options according to the latest commitment of traders’ report released for the date ending April 21. Hedge funds reduced short position in futures and options by 24K contracts while increasing long position in futures and options by 10K contract. Total open interest in the managed money space is now equal, 176K long to 176K short. The balance of the betting market is now equal.