Natural Gas Looking At New Resistance

Natural Gas futures on the Nymex had another negative week before closing 3.7% lower than the previous one at $2.59. EIA confirmed on Thursday a rather bearish withdrawal for this time of year of 52 Bcf in working underground stocks for the week ended March 5. Inventory is currently at 1,793 Bcf, 12.5% lower y/y, 7.3% below the 5-year average.

Price fell naturally from old resistance on a continuation of this post-winter downtrend and it has reached a crucial level around $2.60-$2.70 where we need to see new resistance being formed after a short bounce so we can trade with more confidence towards new lows. The market as expected could not found fresh buying volumes at $3.00. We have considered this move on blizzards as another selling opportunity. We had already seen and took a touch-and go twice at $2.25 in the middle of winter, but calendar analysis will soon come to play again as the market will move on and trade the summer contracts on larger volumes. Resistance at $2.60 is what we want to see now. RSI has been looking oversold so let's operate cautiously and not becoming too greedy about this seasonal idea while shorting the near term charts on exhaustion. Besides, a floor is what we are going to be looking for in a couple of months from now if the market continues to behave typically enough.

We have talked many times about how the 2016 price lows are still shaping this market's seasonality and overall sentiment. Demand for Natural Gas last week fell to lowest levels for the same week since 2016. The gas-fired electricity generation market share will be crucial going forward. Last refill season closed with 30% lower demand for Natural Gas in the United States. The domestic market share is very important for American producers as it absorbs more than 90% of total production. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.