Natural Gas week ahead.

Natural Gas futures market on the Nymex faced a volatile week before closing at same level as the previous one at $2.62. Record April injection keeps going in May as the refill season progresses smoothly. Thursday’s EIA storage report confirmed another impressive 106 Bcf build for week ending May 10. Any three-digit build is at 5year record level in working underground stocks weekly increase. Range bound movements within the $2.50 – $3.00 were anticipated since the beginning of Spring and even a bounce seems to struggle to develop naturally after the post Winter’s exhaustion which is another unfavorable sign for price. Fundamentals are bearish for this market and the 2016 lows are still shaping its overall sentiment. U.S. Energy Secretary’s comments in Brussels last week, on the margin of the new LNG export agreements are showing fear for the current well established suppliers. U.S. Natural Gas pricing will have to be preferable for overseas customers as well as competitive against alternative electricity generation domestic producers. Price won’t increase with lines such as “the U.S. is again delivering a form of freedom to the European continent[…] and rather than in the form of young American soldiers, it’s in the form of liquefied natural gas”. We prefer selling any bounce or rally on first sign of weakness, on shorter time frame charts, as we do for the last few years. The upper bound will offer fresh opportunity while waiting for the Daily MACD to turn negative. We cannot buy this market for any longer period, unless, we see a clear break above the $3.20 which might not even happen before Fall later this year. Trading volumes, daily, 4hour, 15min MACD and RSI offering precision in our entry decisions. Closely monitoring the weather in the Lower 48, the Dollar against majors as well as the U.S. economy’s macro figures.

 

 

Dimitris Kontoulis.