Friday, April 15, 2011

Natty Again

First of all from the DOE storage report Other Market Trends;

EIA Forecasts Slower Production Growth in 2011. In EIA’s Short-Term Energy Outlook (STEO), released April 12, 2011, EIA forecasts that natural gas marketed production will increase 2.4 percent in 2011, considerably less than the 4.5 percent growth in 2010...
Natural Gas Rig Count Falls to 889. The natural gas rotary rig count, according to data reported by Baker Hughes Incorporated on April 8, fell by 2 to 889, which was slightly less than 50 percent of the overall rig count of 1,782. This is the first time since 1995 that rigs drilling for natural gas targets have fallen to below 50 percent of the overall rig count. During this time (as recently as four years ago, rigs drilling natural gas prospects accounted for over 80 percent of the rig count). The natural gas rig count has fallen about 9 percent from a high of 973 in April 2010 and by about 3 percent since the beginning of 2011. The large price difference between petroleum liquids and natural gas on an energy-equivalent basis has contributed to this shift towards drilling for liquids rather than for gas.

Note this is being filed under trends.. which have been decidedly lacking elsewhere;
Weekly
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Unless ever smaller moves and crawling into the apex of a triangle qualify as a trend. 
It is very possible that continues with another test of the resistance followed by a test of the support....

Daily
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The above is the most bullish interpretation of the count, implying a strong resumption of the move up is imminent, probably taking out the resistance trendline. Exceeding yesterdays highs (and .618 retrace) would be a good start, producing  a 5 count up from the 3.98 lows.

However that circled "d" wave has an easily identified double zig zag structure more characteristic of an X wave or "b" wave than "d". This implies further work into the the triangle structure at best prior to another significant ABC up.
The most bearish interpretation would be for a break to the downside out of the triangle producing new lows under 3.73 and possibly 3.28.
 I do not believe a new low under 2.40 is at all likely given the significance of that low discussed previously.

Another note; the seasonal high was made June 15th last year, still plenty of time to break high.

So keeping a close eye on yesterdays highs and lows for an early tip to the evolving count and possible triangle break.
 Hourly





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