Natural Gas Futures on the Nymex had a volatile week before closing well into red, 10.4% lower than a week ago at $1.63 on Friday. EIA confirmed on Thursday a build of 103 Bcf in working underground stocks which now stand 49.2% higher y/y. 20.6% above the 5year average. The market remains nervous after recently forming two shooting stars and shows the fragile environment it needs to operate in.
Nevertheless, Natural Gas is better placed for the years ahead and as domestic demand will pick up after lockdowns will be lifted, already 24 states have been opening up for business, the long await breakout will happen in an uptrend. We are now looking for a higher support level, we want this to be around $1.70 - $1.80 so we can buy the near term further. Daily MACD crossed to bearish on Monday as we have expected.
It might take a couple of weeks before the momentum changes again. We want to buy the dip early, 4hour MACD crossing is a stable sign at the moment. Daily will be even better. We cannot sell at this point. We recently have assumed $1.50 was a floor, then we saw higher lows and early signs of an uptrend so higher highs is what we want to see next. Waiting for Dog Days to offer a better visibility with increase in demand for cooling, followed by winter seasonality which will eventually make this market break out with force in an uptrend. Buying the dips early is what we want to do from now on.
Nevertheless, we still need to respect that the Natural Gas market likes ranging. The overall economic recovery is very important. Developments in the associated gas still need clarification. Oil prices are looking better lately. Bailouts for oil companies are on their way, banks will also cease assets. So let's be careful and trade the near term directionally. U.S. LNG exports recent decrease is significant but 90% of the gas produced in the United States is consumed domestically. The capacity of the overall recovery and the domestic increase in demand are the figures we want to be paying close attention to in the next couple of quarters. December contract currently trading at $2.80 in decent volumes, January at $2.94. U.S. macro figures and the Dollar against majors to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas. 