Extreme weather conditions in the United States has seen temperatures drop to below freezing, leaving, many American citizens restricted in terms of their ability to freely conducted their normal day-to-day routines. In addition to that, the below-freezing temperatures should see demand for Natural Gas pick up as people seek to warm up amid the extreme conditions. Late yesterday, we saw the Energy Information Administration release it’s weekly report showing that Natural Gas stockpiles had come in at 513,000 barrels in the week ending February 1 of 2019 lower than the consensus expectations of 1.6m barrels.
On this basis, I am looking at a commodities trading opportunity, with the expectation that an ‘oversold’ Natural Gas price makes a bullish rebound and reversal.
From a technical standpoint, the price has declined from a peak of $4.92 in November 2018 to it’s recent low of $2.63, and while I may not suggest trying to pick a bottom, the price at current levels appears oversold, attractive from a risk-reward perspective and ripe for a short term rebound.
These are the trade levels:
Buy NG at current levels, $2.67
Take Profit Target: $3.15