Technical & Fundamental Oil Reports Specialists

Follow us

Natgas Outlook: Odds in favour of stronger numbers on both contracts

Published Wednesday, October 10th, 2012

November ICE: Supports were tested yesterday, they held and the market is up from last night’s closing level. Correction points and daily M/As are still below the current price level. The daily slow stochastics are high but positive. In brief, longs are safe for the time being; they should expect higher prices. Under the current technical circumstances they would be right to expect a test of the 65.25 resistance. It is the daily high from the November contract made on September 17. Profit-taking is recommended just below this level. Above this resistance we have the 200-day contract M/A at around 65.70 and the daily high from September 3 at 65.95. In case of a significant rally it is only advised to re-buy if the latter is closed over. If this positive technical picture proves to be unjustified long positions should be protected on a close below the 63.48/30 area. The former is the 50% retracement level of the August-September downtrend and the latter is the 100-day contract M/A. On such a close a test of the 8-day M/A (63.18) and 13-day M/A (62.80) is likely to take place. A dip to the 8-day is a buy but all upside bets should be off on a close below the 13-day. Such a close would be the sign that the uptrend that has been intact for two weeks is over and lower numbers will be on the cards. At the moment, however, this scenario is unlikely. Ultimately the 65.25 resistance is expected to be tested in the not so distant future.

November NYMEX: Not only did the 8-day M/A hold again by the close but the weekly c/p at 3.444 and the 100-week M/A at 3.464 were also below last night’s settlement level. All the contract needs now is an intra-day break over the 3.155/26 resistance area and it will hit its upside objective at 3.546. Yesterday’s high is 3.515 and the high from last Wednesday is at 3.526. Anyone with a long position should take profit just below 3.546, a range resistance and the daily high from October 2. A close above it would mean the highest settlement of 2012 and would be bullish. I expect higher numbers but will be quick to change my mind if or when the 8-day M/A at 3.447 and the weekly c/p at 3.444 are closed below. Until that happens expect further tests of resistance and get very bullish on a close above 3.546.

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.