Natural Gas on the NYMEX had a volatile week before closing 4.2% higher than a week ago at $2.70. EIA confirmed on Thursday a rather bullish withdrawal for this time of year of 122 Bcf in working underground stocks for the week ended Dec. 17. Total inventory currently at 3,726 Bcf. 8.3% higher y.y. 7% above the 5-year average, slightly below the 5-year maximum.
We have wanted the price to bounce so we can find another entry point for selling it short as the overall sentiment remains negative for the months to come while in a post-winter downtrend which, until now, is looking typical enough. Resistance around $2.90 must be respected. We are going to sell rallies or even bounces that are coming our way. We have no interest in following positive legs when operating below the $3.10 level at this time of year. Daily MACD has finally crossed bullish recently which could prolong a positive momentum for another couple of weeks yet green volumes are still needed as the recent large red ones are shaping the downtrend. We remain vigilant for more selling opportunities on exhaustion while trading the near term charts.
The latest legislation passed, which reduces flaring or even the use of Natural Gas in new homes and commercial buildings in a number of U.S. cities is concerning. Only 10% of the U.S. Natural Gas is being exported. The domestic demand is crucial and price must be well supported for producers, especially in a weak dollar and low interest rate environment, but at the same time, it will have to remain competitive enough for the essential market of electricity generation which absorbs more than 35%. The job market is looking fragile once again as recovery is slowing down on Covid resurgence. The CDC is warning of a couple of tough months ahead. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas.
