Natural Gas Support At $3.20 Affirms The Uptrend

Natural Gas futures on the Nymex rallied during the week before closing 6.1% higher than the previous one at $3.28 on Friday. EIA confirmed on Thursday a build of 98 Bcf in working underground stocks for the week ended June 4. Inventory is currently at 2,411 Bcf 13.7% lower y/y, 2.2% below the 5-year average. The refill season is still young and this is the first week where percentages have slightly come down.

The market wants to break out in uptrend on seasonality, and a support level around $3.20 - $3.30 will affirm most of market participants sentiment about the following months. The summer demand will offer a nice benchmark for the winter contracts. We are trading directionally towards a future seasonal ceiling, we feel that $4.00 has to be attainable until later in Autumn but we remain very cautious about the fundamentals of this market. We are taking only one support level at a time while buying the dips. Chances are that the same ranges will offer multiple times the profit on range bound behavior. Any spike will just add to our trading idea faster. The Autumn contracts of U.S. Natural Gas are very often contributing to hedging activity by various asset managers on end-of-year trading.

Inflation is starting to hit the economy while the recovery is ongoing. We have to respect the desire of OPEC+ for another expensive oil era. They did not fare very well last year, in the first unprofitable year in the history of oil and gas. Aramco, the world's largest oil company, is giving less than 3% per year on its five-year bond to investors; this is really stingy. It seems utilities, customers and importing countries will have to compensate the oil cartel for the year of COVID-19. Having said that, the U.S. shale oil-associated gas will remain very much alive following last year's consolidation, so this is another reason for this winter season's uptrend not to be very aggressive. U.S. macro data and the Dollar Index are to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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