Natural Gas Seeing Support at $2.30

Natural Gas on the Nymex faced a negative week before closing 13% lower than a week ago at $2.43 on Friday. EIA confirmed on Thursday a bearish build for this time of year of 76 Bcf in working underground stocks. Inventory at 3,756 Bcf, 14.3% higher y/y, 12.1% above the 5-year average. Both percentages are coming down fast despite that the average rate of injection stands now at 6% above the 5-year average until this point in the refill season. January contract is currently at $3.13.

We have anticipated range-bound behavior as Fall contracts tend to exhaust just before another positive winter spike. Buying opportunities are to be found while contacts are beginning to look cheap. Even from May the direction of the market was obvious to many market participants so winter contracts have taken value early on seasonality. We do not want to become too greedy about this uptrend as the economic recovery is ongoing. Do we anticipate another breakout above the $3.00? It is going to be tough on real time trading. Buying opportunities are to be found on near term charts as long as the 4hour MACD turns positive. Profits can be taken multiple times from the same ranges. Natural Gas too often offers end-of-year hedging opportunities to various investors, even to Natural Gas producers. Spikes are always welcome. It is crucial for us to follow near term market moves while respecting seasonality which builds the overall sentiment and the market's direction of the following months.

Although supply remained stable during this busy hurricane season, demand fell driven by declines in power generation. On the other hand, natural gas fired electricity production has gained another 2% y/y and now stands at 39% competing well with renewables. U.S. LNG exports are looking better lately.

U.S. macro data and the Dollar Index to be routinely monitored as the economic recovery is ongoing at a low interest rate environment. Commodities should be well supported. The housing market is looking promising already. Personal income and outlays data key for the week ahead. Daily, 4hour, 15min MACD and RSI pointing entry areas.