Natural Gas on the Nymex had another volatile week before closing 6.7% higher than a week ago at $1.74 on Friday.
The July contract is currently at $1.89. The EIA confirmed on Thursday a build of 81 Bcf in working underground stocks for the week ended May 15. Stocks are now 45.2% higher y/y. 19.4% above the 5-year average. The price rallied in the beginning of the week before finding resistance at $1.90.
We recently have identified a floor at $1.50, then the price moved, forming higher lows and higher highs are what we want to see next while early signs of an uptrend emerged a few weeks ago. We now need to see sustained $2.00 - $2.20 for the next couple of months and $1.70 - $1.80 will have to be the next confirmed support level. It is currently looking good. Then the market will break out in an uptrend as seasonality features will come into play and winter contracts will be trading in larger volumes.
Although natural gas can be flared, we need to pay close attention in the underground storage capacity utilization, a strong force to the downside, currently at 59% on average across the Lower 48, up from 47% on April 6th.
Of course the crisis is not over yet and recovery will be "U" shaped. All 50 states are now opening up for business and consumer behavior will tell us much in the next few weeks. The unemployment level might not have peaked yet and real demand is key for natural gas. The opportunity will arise following exhaustion as we want to buy the dips. The next 4hour MACD crossing is looking positive enough for another change in momentum, the Daily will be even more reliable. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI pointing entry areas.
