NatGas Plunges After Inventory Build, Buy Dip To $2.75 But Watch Out For This

August 02, 2012

Natural gas prices finally retreated after their huge rally in July. What should traders do now?

Natural gas plunged today after the Energy Information Administration reported that operators injected 28 billion cubic feet into storage last week. That was above analyst estimates that were calling for a build in the low-20s.

Still, the injection was below last year’s 44 bcf build and the five-year average build of 57 bcf.

Moreover, the correction in prices isn’t unusual and fits within our August outlook, which called for range-bound price action just above and below $3/mmbtu before moving above $3.50 in September and October.

In the coming weeks, gas could fall further to the technical support area near $2.75, a level at which we would be buyers.



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