Natural Gas futures on the Nymex had a very negative week amid uncertainty because of resurgence in new coronavirus cases across the United States.
Some states such as Texas and Florida are now considering reversing reopening measures. The August contract closed 11.5% lower than a week ago at $1.54. The EIA confirmed a build of 120 Bcf in working underground stocks for the week ended June 19 which is considered bearish for this time of year.
Inventories are currently 32.5% higher y/y and 18.3% above the 5 year average. We do not want to follow this price move lower.
We have only recently hit a floor at the end of a post-winter downtrend at $1.50. We have been observing higher lows since then and early signs of an uptrend. Winter contracts haven't lost much of their value lately and we have no intention to sell whatsoever, we cannot engage to the downside, not before a breakout lower towards $1.30. We are going to let the market decide for us during the summer because of current low demand.
The market might become thin so spikes are always anticipated. We are trading directionally and opportunities are to be found while buying the dips on shorter term charts. The next 4hour MACD crossing will eventually change the momentum and the daily will fix the overall sentiment. Demand remains moderate and warmer weather is needed as well as larger buying volumes at a time we still need to see we are clear above a higher support level of $1.70. U.S. macro data especially housing and overall consumer sentiment are very important to follow as we move into recovery.
This latest resurgence in coronavirus cases will definitely show us whether the virus is losing potency, while public health infrastructure remains pretty much at the same inadequate level after all these months. Supply and demand looking normal despite the industry's ongoing consolidation and the pandemic. Daily, 4hour, 15min MACD and RSI pointing entry areas.
