Natural Gas: Another Selling Opportunity

Natural Gas futures on the Nymex had a positive week before closing 6.3% higher than the previous one at $2.68. EIA confirmed on Thursday a build of 61 Bcf in working underground stocks for the week ended April 9. Inventory is currently at 1,845 Bcf, 11.6% lower y/y, 0.6% above the 5-year average.

The market is close to $2.70 which most probably will continue offering resistance before the July and August contracts will trade in larger volumes. We wanted to see the Daily MACD crossing bearish before selling from these levels towards the seasonal floor. Range-bound behavior has been highly anticipated and the market is now offering another selling opportunity on the continuation of the post-winter downtrend. We will cautiously take this move having in mind that the market will want to move higher for the winter 2022 later in summer. Consumption during the Dog Days is always offering a reliable benchmark for the months to follow as summer demand is only half of winter's.

Production is comfortably keeping pace with demand while online Natural Gas rigs are 2% fewer year-over-year at 94. U.S. consumption is currently down 3.8% y/y but total demand for U.S. Natural Gas has been looking better lately. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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