Natural Gas Week Ahead - Saturday, Feb. 23

Nymex Natural Gas futures had a rather positive week as the post-winter’s exhaustion seems to find a certain floor, even if it is a provisional one near the $2.60 level. Friday’s session closed at $2.73 while Thursday’s storage report confirmed a 177 Bcf withdrawal for the week ended February 15 as total working underground stocks remain 4% lower than a year ago.

Next week’s weather is expected to be milder than normal for most parts of the Lower 48 and Canada and high winter demand won’t last for another few weeks. We still anticipate a more combative bounce on larger trading volumes so we can open more short positions higher enough, as these levels are looking shallow for the last couple of weeks, while price got too cheap too quickly.

Fundamentals are supporting a bearish sentiment for this market for quite a long time. Winter’s seasonality integrated typical speculation and hedging at higher trading volumes rather than principal reasons, so many market participants won’t expect a range other than $2.50 – $3.00 for 1Q19 or even 2Q19 unless we see spectacular alterations in U.S. LNG exports or production levels.

We prefer to sell rallies on the shorter term at first signs of exhaustion and we can’t buy this market unless we break above $3.20 or see bolstered ranges around that area. Overall it seems that will be a look-alike situation on technical and fundamentals as last year’s springtime.

Daily, 4hour, 15min MACD and RSI defining our entry decisions. 4hour RSI looking neutral, Daily MACD crossed bullish on February 18.

 

 

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