Natural Gas In Need Of Fresh Buying Volumes

Natural Gas futures on the Nymex had a positive week before closing 0.7% higher than the previous one, at $2.56. May contract closed at $2.62, 2.3% higher than a week ago. EIA reported on Thursday another average weekly withdrawal of 36 Bcf in working underground stocks. Total inventory is currently at 1,746 Bcf, 13.1% lower y/y, 4.3% below the 5-year average. Both percentages are looking flat again following the recent blizzards, only days before the new injection season begins.

Daily MACD is looking ready to cross bullish, so we might have to hold selling operations for another few weeks. The market remains in desperate need of fresh buying volumes amid the shoulder season. Momentum is crucial and we have wanted to see this bounce and a level at $2.70 to offer new resistance so we can trade with more confidence towards a natural exhaustion around $2.25 in a continuation of the post-winter downtrend. Of course summer contracts will be trading in larger volumes at the end of May, so we need to remain vigilant in identifying a seasonal floor for this market. Dog Days will be offering some kind of support next, summer demand however will only be half of winter's despite the expected nuclear deficit in electricity generation.

Calendar analysis is inevitable. The Suez canal incident is another reason for the American oil-associated gas not to face the same uncertainties as it had last year, although the industry's consolidation is not over yet. American producers have found support from recent OPEC+ decisions to keep production cuts in place in favor of worldwide production. We have to follow closely these technicalities while trading the near term charts directionally. January 2022 contract remained flat around $3.00 for most part of the winter as we had anticipated in October. New buying volumes will be crucial in building next season's sentiment.

Economic recovery in the United States is looking stable and more stimulus will be available if any new weakness is on sight. Commodities have to be well supported. Better consumer sentiment and mobility will also help. Macro data and the Dollar against majors to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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