Natural Gas futures price witnessed a surprise rally, driven by speedy short covering due a little better than expected inventory on June 15th, 2017. An atmosphere of fear among the short sellers, despite the fact, that there was an injection of 78 billion cubic feet not a withdrawa mainly caused this sudden rally. According to the US Energy Information Administration (EIA), there was only an increase in natural gas stock not a decrease.
On analysis of the movement of natural gas futures price since the of natural gas inventory, I find that the short covering continued till the closing of the week amid the thin presence of buyers at every stage, even a single move in 1 Minute chart witnessed the pressure and the absence of buyers. I find that there may be a lot of short covering yet to be there which may cause a gap on the first trading session. Gap may be down or up, but trading in last one hour before weekly closing incline me to conclude the possibilities of a gap opening on the first trading session for the week of June 18th , 2017.
Though, a short covering created rally is always short lived but it may cause the quantum of fear and greed among the traders in the days ahead, especially when they have witnessed a sudden eruption of a rally even after an announcement of injection. Such sudden rally increases the possibilities of an decisiveness during the coming weeks due to growing fear and greed among the traders.
I find the announcement of weather forecast of higher temperatures in the eastern half of the United States and the cooler temperatures are expected across the northern and east central parts of the United States. Any further shift in weather announcement may cause sudden jolting moves on either side during the next two weeks.
I conclude that the period from June 19th to June 30th, 2017 will be too decisive to decide the further direction of the natural gas moves ahead. My suggestion will be trading with patience and the best policy seems to be waiting and watch first and only then create a position when you feel fully convinced. Sudden jump at any sudden move may be unfavorable.
Have a nice trading week.
