Bill Perkins of energy hedge fund Skylar Capital says the natural gas market could soon rev up. With American exports of natural gas on the rise, while infrastructure "isn't coming on fast enough," Perkins makes the point that "we actually have a very tight market now." "Right now we have the demand-side infrastructure — that being exports — coming on first, and the supply-side infrastructure has not yet caught up," Perkins said Thursday.
"I do believe eventually supply will catch up and kind of normalize prices, but for the next 12 to 18 months, I think the market is in an increasingly bullish position." The commodity has recently jumped from $2.75 per million Btu to about $3 per million Btu. During the winter, Perkins expects natural gas prices to rise to $4.
Yet Perkins grants that weather, that famous driver of natural gas, could throw a wrench in that thesis. The supply condition is "not tight enough to overcome a very warm winter," he said. "A warmer winter will probably keep prices in the same range — but as we go further out the [futures] curve, I think it's extremely bullish."
Colder weather in winter increases demand for natural gas for heating homes.
Source: Bloomberg Pro Terminal
Comment:
The price consolidates and forming a Head and Shoulders whose neckline fails to break. At the same time, the price forms a triangle that is not yet activated. We have a 50% Fibonacci retracement, and a strong bullish movement after then - positive for the price. The CCI50 crosses 0 from the bottom up, signaling for a new upward wave. 50 and 200SMA are still in bearish formation. In a breakthrough and test of the above diagonal, it is good to position ourselves with long positions in view of the foundation and long-term perspectives.
Alternative scenario: If the price goes below the line and 50% Fibonacci correction, the positive scenario will break and we are more likely to see a fall in the value of the gas.
Jr Trader Petar Milanov
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.