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Natural gas futures on the NYMEX had a positive week before closing 11.2% higher than the previous one at $3.78. EIA reported on Thursday a build of 122 Bcf in working underground stocks for the week ended May 30. Total inventory is currently 2,598 Bcf, 10% lower y/y, 4.7% above the 5-year average.

After the post-winter downtrend, we have recently seen this market hitting a floor; the spot price is trading at $2.80, and New York is again at $1.60 spot levels. We identified a potential $2.50 threshold back in February. The July futures contract already shows strong support at $3.40, while range-bound activity is highlighted during this shoulder season. We now want to restart buying operations at larger volumes on the near-term charts as we normally do, gearing up for the upcoming breakout in uptrend on warmer weather across the Lower 48. We should not overdo it at this point, as demand continues to decline in every sector except electricity generation. The dog days of July and August will ensure a faster price rise.

In recent weeks, we have seen how important the market share in the domestic power generation sector is for American natural gas. In the coming years, summer demand will come largely from this share. Competition from other forms of energy will continue to intensify. Even if the current US administration promotes policies against renewable energy sources, it will only be temporary. As electrification will continue with more competitive prices for the end consumer in the Western world and beyond. 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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