Forecasting crude oil and natural gas commodities in the months to come
My overall prediction is a bullish move from oil gas and a pull back from oil during Summer 2015. Although the two commodities typically move together, the recent craziness with oil and great support from natural gas should sufficiently support this prediction.
Natural Gas
Natural gas has remained bearish over the past few months. With bullish predictions falling short during the winter, many hedge funds and investors lost a good chunk of their investments due to the natural gas flush. One of the ETFs that I look at to depict the natural gas price movement in an entertaining manner is UGAZ, a leveraged natural gas bullish ETF.
UGAZ daily chart for the past four months shows a slight downward trend with strong support. Source: freestockcharts.com
UGAZ has put in some great bounces from its $1.74 support, and is about to confirm a bullish reversal. The chart shows a consistent bounce between the $3 and $1.74. While showing a bearish trend, this possible reversal gives it an upside of $3. I am predicting an overall bottom at $2.60 for natural gas and a slightly bullish summer. My current price target is approximately $2.85.
Natural gas price forecasts are scattered for the upcoming year.
The chart above illustrates bullish forecasts outweighing bearish forecasts for the next year, with significantly more upside than downside. As inventories increase slightly and the usage of gas decreases during the summertime, many analysts are bearish. However, demand typically remains constant during this time period. Therefore, I maintain my price target of $2.85. However, if support at $2.60 gives out, I am bearish.
Crude Oil
Since oil cut its price in half over the past year, it has been the recent talk of town. Many investors continue to load up at recent lows as the commodity continues to show a little strength. This chart is a good indicator of oil's potential bullish movement.
Oil typically recovers within the year after dropping, shown in the chart above. In the past, however, inventories haven't increased as dramatically as they have this year. With hedge funds already fully invested at the oil base in the $50 range, there won’t be too much buying. Consequently, there won't be the buying needed to push the price higher. Lack of buying pressure and the huge demand have given me a bearish price target of $53.
Summary
As summer rolls around, investors will continue to look for opportunities even as trading tapers off (typical of the summer months). With these predictions, I will be looking to acquire natural gas, while holding off on crude oil. Again, my short-term price targets are natural gas at $2.85 and crude oil at $53.
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