Natural Gas Probes Support. Is One More Feb '24 Bounce Possible?

1月16日

The US Natural Gas Fun (UNG) paces for its third-worst single-session performance in the ETF's 17-year history as of this writing. Tuesday afternoon weather model runs did the prompt-month of natural gas no favors, and the February contract has plunged all the way back under $3 after poking above $3.30 late last week. The current record-shattering polar snap will prove to be short-lived for the CONUS. A mild forecast in both the NOAA 6-10 day and 8-14 day outlooks are bearish for the energy-dependent commodity.

This is the most volatile time of the year for nat gas, and the infamous “widowmaker” trade (the March/April spread) looms. For now, though, I see support on the chart in a broad range. Notice in my featured chart this week that $2.80 to $3.00 has historically been a battleground between the bulls and bears. What’s more, natty is now testing its 38.2% retracement from the December low to the January high, offering potential support.

The trade here, in my view, is long with a stop under $2.80 on the prompt month. We will have a contract roll later this month to the much cheaper March contract (currently about 45 cents less expensive than Feb). So, we will get a natural gap down once the roll takes place. Thus, the duration of this idea is through January 26.