Natural Gas Anticipating The Post-Winter Downtrend

Natural Gas futures on the Nymex had a volatile week before closing 2% higher than the previous one at $5.05. EIA confirmed on Thursday a build of 83 Bcf in working underground stocks for the week ended September 10. Inventory is currently 16.5% lower y/y, 7.1% below the 5-year average. The average rate of injections into storage remains 14% lower than the 5-year average so far in the refill season.

Price met strong resistance after back-to-back hurricanes affecting production in the Gulf of Mexico. We have talked about a seasonal ceiling that is appearing and chances are that this season's post-winter downtrend will start early. Ranges moved higher quickly but our sentiment remains the same. We are going to sell rallies on exhaustion on near term charts on supply recovery. We feel that any seasonal spike will be sold right away. We have nothing but contempt for any pricing above the $5.00. Hedging activity is already being speculative with short term use of the market on end-of-year trading by many market participants.

We should be really careful at this point while respecting seasonality and the product's physical customers. Daily MACD has to cross bearish first. Well timed trades are key on momentum swings. The market offered us already more than 50% in uptrend. We can afford not to trade for a month or so until it decides for us, but the truth is that the price for the American benchmark is looking very expensive already. Price is already giving away 10% aggressively week over week, against the market really, as consumption of Natural Gas in the United States is to decline also in 2022. We have talked about the fundamentals many times before. We have no interest whatsoever in buying Natural Gas at this time of year. The really smart move here is to begin identifying coming spring's seasonal floor. May 2022 contract is already trading at $3.55 on decent volumes.

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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William K. 4 weeks ago Member's comment

I recall the massive leak problem that occurred in an injection storage field a while back, and while the simple theory seems reasonable, the fact is that undergound storage is always a risk, and in a geologicly unstable area like much of California, underground storage injection is FOOLHARDY.

And speculation is often a risk for fools. One more thing is that in this northen hemisphere the spring season is long past, and automn is upon us, leading to winter and the heating season.