FxWirePro Call Review: Natural gas bear call under threat over Harvey; stop loss set at $3.12

In early August, we upgraded our natural gas outlook from bearish to very bearish in an article available at http://www.econotimes.com/FxWirePro-Natural-gas-outlook-changed-from-bearish-to-very-bearish-844473 and we extended our bearish call target, which was initiated at $3.02 per MMBtu from $2.68 per MMBtu to $2.52 per MMBtu with a possibility of further extension. At that time, Natural gas was trading at $2.82 per MMBtu as it was correcting after finding support around $2.75 area.

Since then, natural gas has risen further and out bearish call is now losing money thanks to Hurricane Harvey that has battered U.S. Gulf coast and Lousiana. The demand for natural gas is expected to grow as the U.S. east coast suffers energy shortage in the wake of Harvey that has led to closing down of several refineries in the region, including the biggest refinery in the United States. Bulls are pushing natural gas higher with an aim of $3.5 per MMBtu.

However, we are not yet scrapping our short call and bearish outlook in natural gas. We would like to recommend a stop loss for the trade around $3.12 per MMBtu and would closely monitor the price, looking for an opportunity to enter fresh short positions.