While commodities enjoyed a mini rally yesterday, Natural Gas is having none of it. Prices of Nat Gas tanked yesterday following yet another week of supply surplus, with the US Energy Information Administration latest data showing a gain of 111 billion cubic feet in the weekly Storage Change report, versus an expected 100 and 88 the previous week.This increase in supply pushed price back below 3.90, slightly below the bottom of current Rising Channel but still slightly above the 3.75 significant support/resistance.
Unfortunately for the bulls, current momentum suggest that price may be able to break 3.75 with Stochastic readings looking to accelerate lower from here. There is ample space between current reading levels and the 20.0 Oversold region that will provide price to potentially reach the 2010 low of around 3.25 based on current momentum. A break of 3.75 will also imply that the bullish momentum that has been built up since April 2012 is impaired, which will subject price to further bearish pressure
Fundamentally, it is worth noting that the USD weakening yesterday did not have any positive impact on Nat Gas, with prices declining 2 hours even before the supply data was released. This suggest that pace of decline can be even higher if USD start to strengthen again, and pull commodities down across the board. With US expected to pump out more Nat Gas, the glut in supply will not be resolved anytime soon. Demand of gas within US is kind of a hit/miss with calls for cleaner energy fuel sources getting softer with economic woes taking most of the limelight. With summer coming up, weather will naturally dictate that energy usage will be lower, which will impact current prices further.