Natural Gas Anticipating Exhaustion

Natural Gas futures on the Nymex had a mixed week before closing 1.4% higher than the previous one at $2.72. June contract is currently trading at $2.81. EIA confirmed on Thursday a build of 38 Bcf in working underground stocks for the week ended April 16. Inventory is currently at 1,883 Bcf, 11.8% lower y/y, 0.6% above the 5-year average. The pace of refill remains slow.

We had anticipated resistance at $2.70. The market cannot find new buying volumes at this price this time of year. June contract is currently at $2.81 so the trading idea here is to sell on first sign of exhaustion towards the season's floor around the $2.55. We still need to see the Daily MACD crossing bearish first. We will operate very cautiously on near term charts as we are approaching to the end of the shoulder season and calendar analysis is inevitable. Range bound activity is highly anticipated. Market participants will be weighting the global talks that are taking place on climate change before making their minds for the winter of 2022.

U.S. Natural Gas should be delivered at competitive prices both for domestic use or for export abroad. Competition from renewable energy sources will become even fiercer soon. The crucial market share of domestic gas-fired electricity generation is at stake. Developments concerning new state ban rules on flaring and use of Natural Gas in new homes and commercial buildings are really important to follow. The economic recovery is looking to be at a plateau currently before more sectors will be doing better, such as leisure, hospitality, education and travel. 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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