Commodities Essential - January 17, 2012

Alert: natural gas oversold? I think so. 

Let’s add UNG …


Between new shale gas production and an unseasonably warm winter so far, natural gas has been getting no love. Its supply is rising as its demand is plateauing. Naturally, price has reflected this well. But the more prices react, the more the fundamentals can change. 


Prices have reacted … and perhaps even over reacted after a 13% plunge last week and as much as a 7% plunge today! 


To be sure, I am doing some bottom-calling here, as it appears natural gas is oversold and ready for at least a corrective rally. But I think as we get further through winter and crude oil prices remain high, we may begin to see natural gas production and usage expectations change in a way that is less bearish for natural gas prices.


Let’s add UNG (United States Natural Gas Fund)  at the market to play for a corrective rally and perhaps more if increased risk appetite and changing fundamental expectations come into play. 





Trade Essentials.



UNG (Last Price: $5.39)


Buy shares of United States Natural Gas Fund, symbol UNG, at the market. Then place an order to SELL ALL your shares of United States Natural Gas Fund, symbol UNG, at $4.77, STOP. This order is good till cancelled. 





JR Crooks