Natural Gas on the Nymex had a volatile week before closing 3.1% lower than a week ago at $1.82 on Friday. EIA confirmed on Thursday a rather bearish build of a 109 Bcf in working underground stocks for the week ending May 1.
Stocks are currently 52.3% higher y/y, 20.5% above the 5-year average. The price rallied significantly in the beginning of the week before pulling back, forming another shooting star on the weekly chart.
Trading volumes have been especially positive for this time of year and as soon as warmer days increase the demand for cooling, the market will likely want to move higher, meeting a typical uptrend with seasonality. September and October contracts have already been trading in decent volumes. The January contract has also been picking up, currently at $3.00. An uptrend is in everybody's mind at this point.
Natural Gas traditionally offers a hedging opportunity because of the summer/winter spread. Fewer active rigs and the developments in the oil associated gas are supporting this move, despite the U.S. economic environment and decreased demand. Residential and commercial consumption declined by 38% w/w. Industrial demand was down 11.8%. Supply is looking normal despite the recent incident in northeast Kentucky.
We need to confirm a higher support level, probably at $1.70. Then we want to see the price moving in a higher range again, breaking above the $2.20 while it swings higher lows reaching for higher highs in an uptrend. We prefer trading the near term, another opportunity will arise on the next 4hour MACD crossing as we want to buy the dip. This might become challenging if the Daily crosses red first, so let's be careful. We then might have to wait for a few weeks before momentum changes again. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas.
