Natural gas prices for October ’15 delivery touched $2.641 per mmBtu on Monday as the commodity traded lower amid a broader market correction.
However, prices bounced off the low during the session and were again higher on Tuesday morning at $2.688 per mmBtu, a gain over over three cents.
The bounce off the $2.64 level is significant because the area represents a level of support (on the October ’15 contract) that has now been tested in five trading sessions starting on April 13, 2015. At each test, the level has held.
Meanwhile, traders and investors of natural gas are looking to Thursday’s storage report to determine if any bounce can continue. Industry analysts’ early estimates are for an injection of 60 Bcf.
By comparison, last year’s injection during the same week was 77 Bcf, and the five year average is 61 Bcf. Last week, the reported injection resulted in a lower surprise, but the commodity failed to hold its gain in light of other factors.
“It was very encouraging to see nat gas bounce of the $2.64 support level on the October contract yesterday,” said Steve Kingston, a reporter for NatGasInvestor.com.
“I’m looking for a green confirmation candle today on the bounce. However, this candle will also confirm one more thing… we will still be in the long running trading range between $2.64 and $2.95.”
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