Natural gas futures on the NYMEX had a volatile week before closing 3% lower than the previous one at $4.76. EIA confirmed on Thursday another bullish draw for this time of year of 126 Bcf in working underground stocks. Inventory is currently at 1,519 Bcf, 15.6% lower y/y, 16% below the 5-year average. Both percentages are now into shallow territory a few weeks before the new refill season begins.
The market has become more technical amidst the crisis in Europe and price is having a hard time finding new lows in this post-winter downtrend. That earlier $3.70 level has to be considered as our seasonal floor and we are finally gearing-up for some buying operations as the June contract will soon be trading in larger volumes. Support at $4.00 is currently looking strong. A seasonal ceiling of $6.50 has to be reached later in autumn.
We want to continue trading directionally on the near term charts. Better visibility will be required for many market participants so range-bound behavior will remain in place for another couple of months during this shoulder season. The pace of injections in working underground stocks in the first weeks of the new refill season later in April will be key.
Domestic demand for the American natural gas remains strong. Gas-fired electricity generation consumption in the U.S. spiked in the last few days more than 100%. This is the best news the industry has had for some time. Of course, it is a temporary spike, but it is another example of the consistency of the industry in delivering larger volumes when an emergency occurs. It also shows the resilience of the commodity amidst intense competition from renewables and nuclear for this crucial market share.
The number of U.S. active drilling rigs have been increasing quickly as of late. The April 2023 contract is currently trading at $3.55 also for a reason. U.S. macro data and the Dollar Index have to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas. 