Natural Gas week ahead.

Natural Gas market on the Nymex faced another negative week and settled 4.50% lower than the previous one at $2.61. Thursday’s storage report showed a large withdrawal of 237 Bcf for the week ended February 1, yet bulls didn’t get in. This market looks really weak for quite some time and anyone holding short positions does not want to close them just yet as we will be moving away from winter’s high heating demand in only a few weeks from now. Trading volumes are low as many market participants are staying on the sidelines looking for an opportunity to sell any bounce on first sign of exhaustion. We will not buy this market unless we see sustained range bound movements between $2.70 and $3.30. The lower bound remains to be identified at the end of this typical post winter’s seasonality sell-off. Abundance of proved reserves in the US and high record production as well as new rigs, can keep pace with the 17% gap to the 5 year average in working underground stocks. The US LNG market is also attentive in keeping competitive pricing for overseas customers and even if $2.50 is a major support level, 2016 lows on market fundamentals might define another target in the long run. RSI still looking oversold.

Dimitris Kontoulis.


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