Natural gas futures on the Nymex had a volatile week before closing on Friday only 0.30% higher than a week ago at $2.84.
There have been crucial sessions since Tuesday, February 4th when the Daily MACD crossed into bullish territory offering positive momentum and potential relief. This might be the last chance before summer for this market to bounce back to the $2.20 levels as this typical post winter downtrend continues.
EIA confirmed on Thursday a rather average withdrawal of 137 Bcf in working underground stocks for the week ending February 6. Stocks 31% higher YoY and 8.3% above the 5-year average.
Stocks might end up in surplus of a surplus before the new injection season begins later in April. The price is already 30% lower than a year ago, so we need to be careful. Trading volumes remained low on Thursday before increasing on Friday. These last two sessions were really nervous ones.
The natural gas market struggled already since late November to finding new highs and the last bullish crossing of the Daily MACD in January 10 offered relief only for a couple of days instead of a couple of weeks. While $1.80 seems to be offering support, for now, bearish fundamentals look everlasting.
The fact that the price can’t hold anywhere near its winter levels at a time where the U.S. economy is in a good place with strong growth, a fine housing market, stable inflation, historically low unemployment, a strong labor market and consumer confidence is a very bearish sign.
Domestic demand for natural gas, abundant technically recoverable reserves and the competition from other energy sources is shaping its longer-term sentiment. Total exports are 10% of total production, LNG exports less than 4%. The domestic demand is decisive for the U.S. Natural Gas producers. I am pointing this because I do not even want to talk about potential China implications yet, as force majeure clauses already applied to imported fossil fuels and other commodities. I remain very optimistic, listening to W.H.O. and official reports, about the situation there on the macro scale. We prefer selling rallies at this time of year, any bounce is to be sold. Opportunity will arise when the Daily MACD crosses into red. U.S. macro figures to be routinely monitored as well as the Dollar against majors. Daily, 4hour, 15min MACD and RSI pointing entry areas.
Natural Gas Week Ahead: Bounce To Offer Selling Opportunity
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