Natural Gas Near Old Support

Natural Gas futures on the Nymex had a volatile week before closing 1.9% lower than the previous one at $2.54. May contract is currently settled at $2.56. EIA confirmed on Thursday a withdrawal of 11 Bcf in working underground stocks for the week ended March 12. Only a few weeks away before the new refill season begins, inventory is currently at 1,782 Bcf, 12.4% lower y/y, 5% below the 5-year average.

The market moved quickly towards old support and it seems like it is already feeling well above $2.40 as it did throughout the winter. We now need to see strong resistance around $2.70 so we can feel better about new lows below $2.25 just before the summer contracts trade in larger volumes. Range-bound behavior is highly anticipated at these ranges just before market participants make their mind about the summer contracts later on. The post-winter downtrend is set to continue, its pace however is what we are now more concerned of. Since October when we correctly identified a seasonal ceiling, we have already took 40% twice in real-time trading so we don't have to be to greedy about this idea from now on. Recent blizzards offered more selling opportunities as anticipated. We will let the market decide for us during the shoulder season and we will remain vigilant in identifying a seasonal floor while trading the near term charts. A better benchmark will come up later in April when the new refill season would have already begun.

Demand for Natural Gas is looking weak following the blizzards while more rigs keep coming online. Current projections are showing that the working gas in storage will comfortably stay above the 5-year minimum throughout the new refill season. Year-over-year percentage changes will be crucial in the first weeks. The overall economic recovery is looking on track in the United States and consumer sentiment is getting better. 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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