Natural Gas Sees Vaccine-Fueled Rallies. Here's What To Do

Natural Gas futures on the NYMEX had a volatile week before closing 0.34% lower than a week ago at $2.88. The January contract lost some ground closing at $3.21. May contract is currently trading at $2.77. EIA confirmed on Friday a build of 8 Bcf for the week ended November 6. Current inventory at 3,927, still 5.3% higher y/y, 4.7% above the 5-year average and above the 5-year maximum.

Selling rallies is what we want to do from now on, trading the near term charts directionally. Price is ranging near a potential seasonal ceiling while the last two contacts had already been losing momentum following the seasonal uptrend which for different reasons came earlier this season. We have no interest in buying Natural Gas at the moment. Opportunities are to be found on exhaustion around $3.30. We have no interest whatsoever following buying legs while we operate lower than $3.50. We already took more than 50% in real time trading on the uptrend after we have identified a floor at $1.50 in May. We do now want to be too greedy about this idea. Any production concerns have already been absorbed fuelling this seasonal uptrend further. U.S. online Natural Gas rigs remain low but this is not something new. Vaccine-fueled rallies are to be seen across the board lately, so chances for a wide spread hedging, on short term use of the market for end-of-year trading are low.

Commercial, industrial and residential demand will be key for the coming weeks and will give us a better benchmark for the spring contracts. The withdrawal levels will offer better visibility as well. Total demand for the coming week remains between moderate and low. New stay-at home restrictions are being put in place for a second time because of record levels of infections and hospitalizations across the Lower 48. The economic recovery is temporarily losing momentum. U.S. macro data and the dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas.