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Natural Gas: Identifying a Seasonal Floor

Published 01/29/2023, 02:58 AM
Updated 07/09/2023, 06:32 AM

Natural Gas Futures on the Nymex had a negative week before closing 5% lower than the previous one at $2.85. EIA reported another bearish draw for this time of year of 91 Bcf in working underground stocks for the week ended January 26. Total inventory is currently at 2,729 Bcf, 4.1% higher y/y and 4.9% above the 5-year average. Both percentages have recently been on spectacular ascend.

All our shorts and Puts positions have been in the money for the past six months, and we now feel we need to identify the upcoming seasonal floor on time. We have already tested some buying operations on this latest MACD divergences. The price of the American benchmark must average $3.50 this year to be friendly.

EIA recently put this number at $4.7, but I still believe this is too optimistic for 2023; however, it confirms that we need to expect the floor at $2.85 for the April contract. March was trading at $8.00 when we correctly predicted a $3.50 direction toward April. That was back in June ‘22.

Of course, we need to proceed with surgical accuracy for the coming two months as the downtrend needs to exhaust smoothly amid the shoulder season, and the market will become a little shallower. Aggressive spikes are always probable on the near-term charts on momentum.

U.S. macro data and the Dollar against majors must be monitored routinely. Daily, 4 hours, 15min MACD and RSI are pointing to entry areas.

Nat Gas 4-H Chart

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