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Natural Gas Market Commentary, by FCI - Going into the June 04 trading day, we knew we had observed a major upside breakout in July natural gas the previous day with volume quite active, although there was some short covering by large speculators. Technicals had suggested an intermediate bottom was in place, although fundamentals disagreed. Fundamentally, we had large supplies and questionable demand. The weekly natural gas storage report had shown an injection of 88 bcf with total storage at 2357 bcf or 14.9% above the 5 year average. For the prior month natural gas storage had increased 362 bcf. The market had recently closed above the 9 day moving average, supporting a short-term positive trend. Although the RSI was nearing 70+, giving some indication of a potentially overbought market, natural gas managed to rally and close on June 04 at $4.819.
By the following week, the EIA weekly storage report showed an injection of 99 bcf, bringing total storage to 2456 bcf or 14.4% above the 5 year average. For the week of June 07 to June 11, price action was disappointing to natural gas bulls.
By June 16, 2010, with natural gas managing to put in fresh highs the night before, it appeared that natural gas was due for a decline. A potential tropical storm east of the Western Antilles was downgraded to having a 10% chance of developing into a tropical storm and natural gas didn’t get the positive mention from President Obama in his Presidential address as may have been expected; people were expecting the president to shift the US more towards alternative energy sources; perhaps traders were buying on the rumor and selling on the news.
The Commodity Futures Trading Commission took a first step toward imposing limits on positions energy traders can hold, but three commissioners expressed reservations that could make it harder for the rule to be made final.