Natural gas futures on the Nymex had a positive week before closing 0.9% higher than the previous one at $3.24. EIA reported on Thursday a build of 87 Bcf in working underground stocks for the week ended June 26. Total inventory is currently at 2,922 Bcf, 0.8% lower y/y, 6.4% above the 5-year average.
The latest seasonal ceiling of $3.50 has been respected so far in summer. We wanted to sell this latest rally as a whole on a way to meet the floor for a second time. The 4H charts have been offering a healthy cumulative 20% this last month on directional trading. We correctly predicted range-bound behavior before this market breaks out in uptrend later in autumn when the winter contracts will be trading in larger volumes.
We believe that the scenario recently circulated by some major banks and analytical firms—pointing to natural gas prices reaching $5.00 —is not very likely. Naturally, oil companies have envisioned this scenario, as they will seek to recoup the losses of oil operations through natural gas. However, it is the other forms of energy—the truly clean ones—that will determine natural gas pricing in the coming years. The electricity generation market share is too precious to loose. When natural gas is transported as LNG, it loses all its advantages over other forms of energy. Scenarios involving even greater exports of US LNG are disadvantageous for consumers both within and outside the United States.
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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