N.Y. Natural Gas Futures May Fall to $4: Technical Analysis

August 17 (Bloomberg) -- Natural gas futures in New York may drop toward $4 after failing for a fifth day to break above the 100-day moving average, according to a technical analysis by Hamza Khan with the Schork Group Inc., a consulting company in Villanova, Pennsylvania.

Gas has traded below the moving average, currently about $4.39 million British thermal units, since Aug. 9. A break below the September contract’s all-time low of $4.14, reached on May 6, will send the futures to $4, according to Khan, an analyst based in Villanova.

“We are seeing a lot of resistance on the up side, and I won’t be surprised if we test the life-of-contract low of $4.14 this week,” Khan said. “A downward trend has been established. It’s very easy to sell gas in this market.”

Natural gas for September delivery fell 10 cents, or 2.3 percent, to $4.228 per million Btu yesterday on the New York Mercantile Exchange. The futures have declined in eight of 11 trading days this month, dropping 14 percent.

“The bulls can’t find easy answers to justify higher prices,” Khan said.

Hedge funds and other large speculators cut their bullish bets on natural gas by 23 percent in the week ended Aug. 10, according to Commodity Futures Trading Commission data.

To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.