Natural Gas: Support At $5.00 To Be Tested

Natural Gas futures on the Nymex had a positive week closing 8.5% higher w/w at $6.37. EIA reported on Thursday another bearish, nontheless, build of 64 Bcf in working underground stocks for the week ended November 11. The total inventory is currently even 0.1% higher y/y amid this extraordinary year, only 0.2% below the 5-year average.

The market is taking a breather on colder weather amid this post-winter downtrend. We wanted to see the behavior of the latest Daily MACD crossing on the spring contracts, before starting selling again. The price is getting scorned once again from lower highs and we need to find those lower lows until next May. A breakout below the $5.00 support level is the next target. Surgical accuracy is going to be needed on the near term charts. The downtrend continues on extraordinary inventory resilience. We have been warning about this since May. The next Daily MACD bearish crossing is the crucial one. The outcome will be used as our next benchmark for the following shoulder season.

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In the recent COP27 UN's climate summit, the fossil fuel delegates trying to shape the debate in their favor were present at record high. After the conclusions it is becoming more and more clear that the industry should be concerned about whether natural gas remains the bridge fuel amid the energy transition. As advertised as such. Some believe they can increase its price fivefold to compensate for future oil losses. The reality is that global demand for natural gas is going nowhere for the next 15 years. Too many law-makers around the world can now have objective scientific evidence. Therefore the gas-fired electricity generation market share has to be preserved. And the only marketing tool left will soon be pricing. Renewables and Nuclear are looking really competitive.

Someone can pay $300 billion for fossil fuel public relations on a soccer tournament which will be boycotted in most parts of the Western world. Either he sells beer or not, that does not increase global demand for natural gas.

U.S. macro data and the Dollar against majors have to be monitored routinely. U.S. existing home sales decrease for ninth straight month in October. U.S. leading economic Index slumps more than expected close to 1% in October. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.


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