Natural Gas Futures Well Settled Despite The Blizzards

Natural Gas futures on the Nymex had a volatile week amid frigid weather in most parts of the United States, closing 3.4% higher than a week ago at $2.99. EIA confirmed on Thursday a bullish, nonetheless, withdrawal for this time of year of 237 Bcf in working underground stocks for the week ended February 12. Total inventory is currently at 2,281 Bcf, 4.4% lower y/y, 2.6% above the 5-year average.

The price has been ranging around old resistance and the market seems like it won't find another ton of buying volume that is needed to overcome these levels at this time of year. Winter storms are offering a benchmark for months to come in terms of pricing, supply, and demand. Shoulder contracts are already trading in large volumes. Despite the rise in spot prices in many different hubs because of the blizzards, the prices for forward deliveries at the New York Mercantile Exchange have been well settled in the last couple of weeks amid this temporary energy crisis. The price of the 12-month strip averaging March 2021 through February 2022 futures contracts climbed only 12¢/MMBtu to $3.158/MMBtu.

We have no interest in following buying moves, not before May. We are selling rallies on the first sign of exhaustion on near-term charts. The post-winter downtrend is set to continue but we must keep in mind that ranges lately moved a little higher from where we would have liked them to be. The next daily MACD bearish crossing and resistance at $2.60 will determine much and it will make us feel better about new lows. We have already seen twice a touch-and-go around $2.25 in the middle of the winter. Summer demand for Natural Gas is only half of the winters. Online rigs are now 18% fewer than a year ago but supply, in general, has been comfortably keeping pace with demand. U.S. Technical Recoverable Resources are at a record high. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD, and RSI are pointing to entry areas.

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