Natural Gas Week Ahead - Saturday, Feb. 2
Natural Gas on the Nymex had a negative week closing 14% lower than the previous one at $2.73. Thursday’s storage report confirmed a 173 Bcf withdrawal which is average for the week ending January 25.
Working gas in storage remain 0.6% lower than a year ago as well as 13% shallow compared to the five-year average. At the same time price holds last year’s levels. We might see larger withdrawals in the coming reports because of last week’s polar temperatures in the northern parts of the US.
Selling this market though is the only option for a longer period as we are moving closer to Spring, yet we might have a price range that we will need to respect for the months to come. Its lower boundary will be defined once we see a floor to this typical post winter sell-off in the coming month. Unless we see major differentiation in the US production to demand ratio, price will remain under pressure until summer.
Shallow trading volumes are common for this time of year resulting range bound movements. Hold any short position and wait for a bounce so you can sell even more on the shorter term charts. Daily MACD crossed bearish which is another negative sign. RSI looks already oversold so stops must be put in place wisely.
In any case, we do not want to underestimate the appetite of many market participants hedging while trading the opposite direction, especially at this time of year when physical pricing got so weak so quickly in most of US Natural Gas hubs.
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