Natural Gas futures on the Nymex had a volatile week before closing 2% lower than a week ago at $1.8.
EIA confirmed on Thursday a build of 26 Bcf in working underground stocks for the week ended July 24. Inventory currently 23.9% higher y/y. 15.3% above the 5-year average. Price rallied significantly from recent shallows before reaching resistance at $1.90. This is an area we need to see offering support in the next couple of months. The market should break out in an uptrend following higher lows around $2.00.
We are not there yet, though, since coronavirus concerns continue across the Lower 48. Although warmer weather has been supporting higher lows, the price remains relatively low.
The U.S. government failed to contain the virus therefore the recovery will be prolonged. Consumer sentiment will have to recover early next year. Housing data are looking promising already. Supply and demand have remained stable during the crisis and along with the industry’s consolidation. We like to buy the dips and any pullback on near term charts on our way to $2.50 while trading directionally. The same ranges can offer multiple opportunities to profit. The price of the commodity will be well supported, eventually, in a low rate environment with the dollar facing a lot of pressure lately. We have no intention whatsoever to follow any short selling on a downside scenario. We are not going to follow concerns or rumors as we are operating in an election year. If there is a case of another crisis we will let the market decide for us later on. We have only recently identified a floor at $1.50, following the post-winter downtrend and the coronavirus outbreak, we have been buying the dips since then. December contract currently at $2.79, January at $2.92 on decent trading volumes. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas. This weekly will be back in September. Stay safe and have as much fun in August!
Natural Gas Expecting Support At $1.90 Soon
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