Natural Gas futures on the NYMEX had a volatile week before closing 6.6% higher than a week ago at $3.38.
EIA confirmed on Thursday a build of 29 Bcf in working underground stocks for week ending October 23. A week away from the start of the withdrawal season inventory currently stands at 3,955 Bcf. 7.8% higher y/y. 8% above the 5-year average. Price is currently 20.3% higher y/y.
The seasonal uptrend is losing momentum lately and makes us trade cautiously so we can identify a ceiling for the market. The January contract is currently trading at $3.50, May is at $2.99 on decent volumes.
The economy will face new contraction because of the resurgence of COVID cases. The U.S. sets a world record for new cases in 24 hours. About a third of U.S. counties in the past month have recorded more daily deaths than any other time since the beginning of the pandemic. Local curfews might be needed to slow the spread, personal spending and income will temporarily be hit again. Hospitalizations due to COVID are rising in 48 states. I do not even want to discuss the probability of social turmoil due to unclear election results.
It's likely that we'll see traders buying the dips early since May, on seasonality and because of the overall oil and gas industry's consolidation. We do not want to go against the market so we remain focused in identifying a ceiling while trading on near term charts. Spikes are adding more profit. A month from now with the withdrawal season ongoing we will have a fair benchmark for the spring contracts. Daily MACD should cross bearish again on larger trading volumes for the December contract. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas.
