Natural Gas on the Nymex had a negative week before closing 11% lower than the previous one at $2.33. EIA reported on Wednesday a rather bullish build of 32 Bcf in working underground stocks. Total inventory is currently at 3,134 Bcf, 9.6% higher y/y, 18.8% above the 5-year average. Both percentages are steadily on the descending during this refill season. Stocks will soon be below the 5-year maximum for the first time in 8 months.
After we took the second leg of this seasonal uptrend, we wanted to see a higher support level. The August contract, however, got pressured in the early days of its larger trading volume sessions.
We still want to buy any dip coming our way even if the uptrend has lost its steam, so the next Daily MACD crossing is what we are currently looking at. The 4H chart is looking oversold already. We are going to test all these same 10% ranges again and again until the end of September. Dog days will now offer new positive momentum while rigs are keep on droping in number. We believe that another $3.50 level is attainable before winter.
Some of the fundamental numbers for the U.S. economy look to be getting worse, but the labor market is still looking strong. High interest rates will be maintained for a long time, even if there is a slight de-escalation in the coming months.
This will also happen for geostrategic reasons. I want to point out one more time, as I read tons of articles in the media about the advertising push for the LNG market and its expansion. The fundamentals for the natural gas market have come under a lot of pressure due to the bad publicity the commodity has received due to Putin's war. U.S. contracts above $4.00 will meet a lot of resistance, as LNG exports will not easily exceed 15% of the total U.S. demand. It is this demand that must, at all costs, be maintained in the midst of competition from other forms of energy for electricity generation during the transition. The current green volume on the August 2026 contract, trading at $3.67, is a really positive note, if not optimistic.
U.S. macro data and the Dollar Index must be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas. 