Both energy sector counters have been quite volatile and
the trend seems to continue this winter season. Natural Gas was seen trading in
green yesterday on MCX but today morning lost all its shine.
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Source - Market Realist |
We have seen Natural gas counter gaining around 16% momentum
this week and a profit booking was expected.
Natural Gas is a seasonal commodity and is following an
uptrend based on the natural gas weather reports which predicts much colder
than normal throughout most of the mid-west according to the latest forecast
from the National Oceanic atmospheric Administration for next 2 weeks.
Crude Oil was seen in surplus on 2018 but this trend is
expected to reverse according to a new report from Bank of America Merrill
Lynch.
Natural Gas price forecast
Natural Gas was seen trading in red this morning and opened
down with a gap above. Looking at the weather reports and supply situation,
bullish traders were seen dominating the market. Although, we saw prices
rebound at the resistance and the international market couldn’t break $3.6.
Despite export hit the record number in December which added
demand, Natural Gas couldn’t break the resistance. We can expect prices to
trade in a range for this week. The range from NG is 230- 265 for Jan contract.
We can expect some more profit booking today and prices
could move down to 235. Looking at the candle stick for the trading session on
Tuesday, it looks likely that the market participants also recognize that we
had gotten ahead of ourselves. 232 underneath is a support level and we can
prices around that range.
I would suggest selling at around 245 for target of 236 with
stop loss of 255. For bullish traders, I would suggest buying at 235 for target
of 250 to 260 with stop loss of 229. Would recommend traders to hold their
position for short-term since NG is quite volatile.
Crude Oil price forecast
As mentioned earlier in one of my post, Crude Oil prices
have limited upside, we saw prices being whipsawed recently.
Based on a new report released by Bank of American Merrill
Lynch, oil prices had collapsed in late 2018 not only because of an oversupply
problem, but also because of other “non-fundamental factors,” including the
selloff of long positions by hedge funds and other market managers, as well as
by fear and uncertainty in broader financial markets.
However, “now the 1.3mn b/d surplus in 4Q18 is starting to
reverse,” Bank of America Merrill Lynch analysts wrote in a January 10 note. In
fact, the bank says that the OPEC+ cuts could translate into a “slight deficit”
for 2019. Oil price forecasts vary quite a bit, but a dozen or so investment
banks largely agree that the selloff in late December, which pushed Brent down
to $50 per barrel, had gone too far. Read more here
For intraday, I would recommend selling Crude Oil today at
3730 for target of 3640 with stop loss of 3750.
For positional traders hold your horses and enter market at
3300 for long term target of 4100. Crude Oil market has been oversold for quite
some time so stop loss should be around 3100. I would not recommend to hold
Crude Oil for long time since commodity is completely dependent on demand and
this could vary
Read disclaimer before investing
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