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July 2, 2008

Natural Gassed

For almost three months, I've been watching natural gas rally from about 9c to 13c. The move has been relentless. Almost every day has been an up day, and NG would rally even when crude oil was down a few bucks. Today, finally, something different is happening. Crude is up a half a buck and NG is dropping a percent. I believe we are seeing a sign that the energy sector is running out of gas, if you'll excuse the pun. I'm buying a couple puts on CL because I don't think the 50c pop this morning is going to hold.

Here is another bearish sign for oil:

oil chart

If oil is going to finally sink, it's also going to have to hack through the $130-$140 consolidation zone. The next few days should be interesting for this market.

 

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