Natural Gas Week Ahead - Monday, November 4th

Natural Gas on the Nymex rallied during the week closing 17% higher than the week before at $2.70. EIA confirmed another 89 Bcf in working underground stocks have been injected for week ended October 25. We anticipated this somehow aggressive move after benchmark levels of Summer’s floor and shallow pricing during the past months inside a plateau while we expected the conclusion of the refill season. Cold shots and first Arctic air in Northern States did enough to offer another positive spin to this abiding bearish market, as seasonality feature is being integrated. Positive macro data regarding the U.S. economy offered further backing, U.S. economic growth slows much less than expected in Q3, private sector job growth exceeds estimates, U.S. GDP climbed more than expected in the third quarter, employment rises as well.

Since late July when we fell market was off the $2.50 long term support level we have liked to buy dips in shorter period charts. We feel any early momentum is crucial as U.S. Natural Gas market tends to be used by many market participants for end of season hedging. Demand doubles compared to Summer. Chevron (CVX) earnings down 36%, Exxon Mobil (XOM) drop 49% in Q3, are some of the examples why short term use of Natural Gas almost traditional seasonal Winter spike, can offer portfolio balance to investors. We like to buy any momentum on sentiment build up, for another month, before reevaluating the Spring contracts.

The Dollar Index to be permanently monitored, demand for Natural Gas for heating and electricity generation remains high as well as the storage surplus, a reason why we might not see last year’s extraordinary spike level, yet $3.00, even $3.50 levels must be considered attainable. February contract currently at $2.75. Daily, 4hour, 15min MACD and RSI pointing entry areas.

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