Natural Gas In Downtrend

By Dimitris Kontoulis

Saturday, October 8, 2022 8:51 AM EDT

Natural Gas futures on the Nymex had a volatile week before closing flat on Friday at $6.74. EIA confirmed on Thursday another bearish build of 129 Bcf in working underground stocks for the week ended September 30. Total inventory is currently at 3,106 Bcf, 5% lower y/y and only 7.8% below the 5-year average.

The downtrend continues but we have reached a crucial support level too soon in autumn and this makes our directional trading strategy tricky. The refill season is going to be prolonged, we had been anticipating this since May, that the inventory won't be more than 9% above the 5-year average at the end of it. It is looking even better for us now. Any end-of-year trading hedging spike, even the winter one is to be sold immediately. Too many gifts for us, back to back selling opportunities on bad calculations by the largest trading offices on planet lately. Or by simply profiteering activity by them. It makes no difference to us.

We now want to see the next Daily MACD crossing behavior before testing the $5.50 support level in December which is currently offering a breather. We don't want to buy this only for a month. The direction remains for $3.50 in April.

What a "no event' that Nord Stream explosions were huh? Putin begging for Nord Stream 2 flows while Europe does not even need Nord Stream 1 at all. After the latest OPEC+ decision, it is becoming increasingly clear to western investors that it will be a problem to be associated with fossil fuels in the near future amid the climate crisis. Especially since the IMF wants the annual investments in renewables to increase at least tenfold. We have foreshadowed this years ago. We talked numerous times about the American future low LNG exports- compared to domestic consumption. We will talk about more politics and democracy or European Union being the most open-handed customer of anything on the planet, at another time.

U.S. macro data and the Dollar Index to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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