Natural gas futures on the Nymex had a positive week, closing 8.6% higher than the previous one at $3.28. EIA reported on Thursday a build of 92 Bcf in working underground stocks for the week ended May 22. Total inventory is currently at 2,483 Bcf, 0.9% higher y/y, and 6.2% above the 5-year average. Both figures have been on a steady decline since the start of the refill season.
The market is moving lazily towards a resistance level. $3.50 is likely to be a new ceiling for this summer season. We have been reluctant in buying this move since the market met the seasonal floor of $2.50 last month.
Range-bound behavior is what we are going to see before a break out in uptrend for the coming winter contracts later in August. We still want to sell this latest rally as a whole. Trading the daily chart, waiting for the next MACD bearish crossing. We believe that the market is going to meet its floor for a second time in July before breaking out in an uptrend for the colder season.
The failure of the United States government to keep fossil fuel prices low is giving other forms of energy another opportunity to demonstrate their competitiveness. Especially in the most basic market: domestic electricity generation. I recently wrote that the only hope I have for ending wars is central banks and interest rates that will start to worry governments. The recent example of the American ten-year bond makes me optimistic about the future of the entire economy. US macro data and the Dollar Index have to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.
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