Now it is the Gas Bull’s Turn!
Apropos yesterday’s (Thursday's) discussion on the oil market, it is now-or-never for bulls in the natural gas market.
However, before we go there, the US dollar got hammered early yesterday and Nymex crude oil responded in accord. Yet, upward momentum stalled 24 cents short of $84.67, the 62% retracement (May 03rd/25th).
The market then tanked 4% off of intra-day highs as the dollar staged a minor comeback in New York trading.
As such, The Schork Report’s bearish daily bias in Nymex WTI survived for another session. But, we still have a maximum of minimum confidence in this bias. To wit, before yesterday’s selloff, crude oil closed higher in 8 of 10 sessions for an $8.52 gain (+11.4%).
Therefore, yesterday’s “weakness” was the residue of profits being locked in ahead of this morning’s U.S. jobs report.
In this vein, it comes down to how the dollar reacts to this morning’s payrolls number. Should the greenback tank we will look for another attempt at $84.67. A close above this level will force us off of our daily bearish bias.
On the other hand, failure to breach yesterday’s $82.37 pivot will do a lot to boost our view that oil has double-topped.
Meanwhile, yesterday the DOE reported a massive injection of natural gas, 85 Bcf, into underground storage last week. In the report’s wake, Nymex natural gas plunged from a $3.799 high in the ten minutes prior to the report’s release to a $3.692 low in the ten minutes following the release.
In the final ten minutes of pit trading, the spot contract touched the year-to-date low at $3.610 and settled at a 13-month low, $3.617!
Thus, similar to the situation for oil bears, it is now do-or-die for gas bulls. Either they foster a defense here, double-bottom and mount a run back towards $4… or they go home and let the bears run this thing below $3.500 and towards the lower bound of The Schork Report’s weekly outlook, $3.429.
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.