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Sunday, June 24, 2012

The curious case of Natural Gas Revisited...

Eight weeks back, I wrote about Natural Gas and the fundamental tectonic shift that had caused 80% crash in NatGas prices over the past few years. The post is available here  

At the time of writing the above post, Natural Gas was a sinking ship, but I had bravely and foolishly pointed towards a possible double bottom and possibility of recovery of prices. Guess what, Natural Gas continued to crash by another 10 Rs after my post and has recovered whooping 50% since then.

 Currently the commodity is trading at Rs 150/mmBTU and has formed another technical pattern - the familiar good'ol Head and Shoulders. Such is the power of Technical Analysis!!

 I had pointed that, NatGas has to cross 130-140 price level, and then there is possibility of it touching 170-180 which is a long term resistance as is evident from the chart below. It may require a strong push for NatGas to cross above 170-180 levels. If that happens, NatGas will again enter its long term price range of Rs 180 to Rs 220, where it stayed for good many years in recent past.

I am also suprised when i plotted the chart for Crude oil, versus the chart of Natural Gas and they pretty much showed a inverse relationship. As Crude has crashed in past two months, NatGas has recovered and has created a inverse relationship with Crude Oil charts. 

Fundamentally, there is definitely something cooking here. (pun intended!).

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