Natural Gas Identifying A Seasonal Floor

Natural Gas futures on the Nymex had a negative week before closing 3.8% lower than the previous one at $2.52. EIA confirmed on Thursday the second build for the new refill season of 20 Bcf in working underground stocks for the week ended April 2. Total inventory is currently at 1,784 Bcf, 11.6% lower y/y, 1.3% below the 5-year average. Both percentages on the descendant.

The market cannot find any positive momentum whatsoever while on a natural seasonal exhaustion. Buying volumes are needed while bounces and rallies have been offering fresh selling opportunities since November. The post-winter downtrend is set to continue. Its pace is what we are now looking at. The Daily MACD is looking ready to cross bearish any moment so we remain confident that a seasonal floor is to be reached at the end of the shoulder season. The $2.25 level is currently offering strong support for the warm summer days. August contract is currently looking flat at $2.70 on decent trading volumes. Range-bound behavior is anticipated until June.

U.S. Natural Gas exports are at record high while the housing market and the overall economic recovery have been well on track lately. Domestic consumption however which absorbs more than 85% of the gas produced in the United States remains weak. EIA expects even less demand for 2021 and 2022 on warmer weather and weak industrial activity. The gas-fired electricity generation market share will be decisive. Natural Gas will have to be well priced to compete with Renewables. We first talked about the RENIXX Index in February 2020. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.