Natural Gas Week Ahead - Saturday, Dec. 29

Nymex Natural Gas futures faced a bearish week as price went south by more than 13% than the previous one and closed Friday at $3.31. The same day’s weekly storage report confirmed only a small draw of 48 Bcf in working underground stocks, which immediately pressed the price aggressively. Milder weather across the Lower 48 seems to be fueling this bearish sentiment the market is facing. Fundamentally even, on U.S. record levels of production and abundance of proved reserves, as demand is expected to be lower than normal also for the week to come.

After the breakdown two weeks ago, we anticipated a move even deeper for price to reach the longer term Fibonacci support area around $3.20. This is the case and we continue to sell the same rallies on shorter term charts, while MACD and RSI are trustworthy indicators of entry and exit momenta.

Some macro indicators must be closely monitored. The monthly rig count, the Dollar against majors, the oil to gas ratio that started looking divergent enough, as well as the various U.S. NG export agreements. We are still trading winter contracts and even if seasonality started looking thin, shooting stars are always expected on larger trading volumes, speculation and hedging. 

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