Natural Gas Ranging Below Resistance

Natural Gas on the Nymex had a volatile week before closing 6.6% lower than the previous one at $3.66. EIA reported on Thursday a rather bearish draw for this time of year, of 88 Bcf in working underground stocks. Total inventory is currently at 3,417 Bcf, 8.7% lower y/y and only 1.8% below the 5-year average.

Price has moved another 8% lower since two weeks ago, the market will offer us another 20% in downtrend before the spring contracts will get trading in larger volumes. We now want to see some kind of a relief rally to feel more comfortable about selling the near term charts. Range bound behavior below latest resistance is looking tricky. The direction is down. Warmer weather than normal for this time of year in the Lower 48 has the command. Any potential blizzards and price spike because of supply shortages or temporary increase in demand will be considered as a gift really for even more selling opportunities just like we did last February.

U.S. macro data and the Dollar Index have to be routinely monitored. The latest city to ban the use of natural gas in new buildings is the biggest consumer in the United States, New York City. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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