It's official, Crude Oil and the products have moved lower putting in an interim top in the last two weeks. Will natural gas follow suit? As I said on Wednesday, crude broke the up-sloping trend line that has been in place all of 2014 and lower trade looks likely. Futures found mild support at the 38.2% Fibonacci level Thursday. While crude oil futures are $5 off their highs, Heating Oil has fallen 10 cents and RBOB same.
Careful Picking Those Tops
Natural Gas is lower only the last two sessions so to some extent we are picking tops, which can be dangerous. On Thursday the 8-day MA (orange line) was probed. I like the risk-to-reward dynamic putting on bearish trade at these price levels. Futures traders could be scaling into bearish trades with stops above the recent highs. I also have suggested bearish
What Happened Thursday?
The move lower Thursday was likely triggered by a larger-than-anticipated increase in supplies for the second week in a row. Producers added 82 billion cubic feet to storage. This inventory bump beat the 5-year average by 24 bcf and is a testament of how quickly the US has been able to replenish its supply coming off the 11-year low in inventory. The EIA reported that current stockpiles come in at 981 bcf. While I am not anticipating a bear market I do think we see a further retracement, which I view as a trading opportunity.
