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Natural Gas Near $3.00 Resistance. Will The Uptrend Continue?

Published 10/11/2020, 04:56 AM
Updated 07/09/2023, 06:32 AM
NG
-3.66%

Natural Gas futures on the Nymex rallied towards $2.76, closing on Friday 13.5% higher than a week ago. EIA confirmed on Thursday a build of 75 Bcf in working underground stocks for the week ended October 2. Inventory at 3,831 Bcf, 13.1% higher y/y. 11.5% above the 5-year average. Both percentages in the descendant.

We have anticipated a support level at $2.30-$2.40 for the November contract. We have been buying the dips early since May when we have identified a floor for this market amid the post-winter downtrend and the coronavirus crisis. We prefer trading seasonality on momentum on near term charts as winter contracts added value early this season. The market recently broke above 200 EMA and we are now going to test major resistance levels around $3.00. January contract adding only half of the value of these recent rallies, currently trading at $3.35, so we remain confident enough of the direction, but this uptrend might soon need to exhaust, just before another winter spike. Natural Gas market, because of its seasonality feature, offers hedging opportunities to various market participants. Short term use of the market is really common this time of year so trading volatility can be very profitable. Range-bound behaviour very typical for Natural Gas.

U.S. LNG exports remain stable week over week, consumption and demand keeping pace with the market standards despite this busy hurricane season. I have been pointing out since April, the extraordinary resilience the industry is showing amid the coronavirus crisis and the overall consolidation in terms of stability in fulfilling consumer needs. U.S. macro data and the ongoing real economy's recovery are key for the month to follow. Daily, 4hour, 15min MACD and RSI pointing entry areas.

NatGas 4H Chart

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