Natural Gas on the Nymex had a volatile week closing 1.21% lower than the previous one at $2.65. Demand remains moderate even in the middle of widespread cold for most of the Lower 48. Thursday’s EIA inventory data showed a large withdrawal of 94 Bcf, the first of the season, which immediately brought back the positive sentiment although more green trading volume is still needed for the market to reach new highs.
We anticipated last Monday’s reverse on the Daily MACD which is natural to keep a slow gear for another week. We still like to buy the dips but, as Winter progresses, we will keep a close eye on the pace of this 16% surplus in working underground stocks compared to last year’s levels. Stocks remain on the 5-year average but the market is facing even more pressure from other sources of energy for electricity generation and its bearish fundamentals are looking everlasting following the 2016 lows, even more so after this last extraordinary injection season.
Eventually, the Winter withdrawal pace will offer a benchmark price even for the seasons to come. Daily MACD reversed into red territory last Monday, but the first withdrawal report held a higher low for the price which is a bullish sign. We need to stay cautious as the market filled a gap twice already since August which can make many market participants feel exhaustion is not too far away. February contract currently at $2.64, May at $2.30. Dollar against majors to be closely monitored as well as the LNG exports and major U.S. macro data.
Manufacturing PMI rose more than expected in November and the latest housing data also offering support. We like to trade the shorter term charts directionally. We can’t short sell at this time of year and any pullback will offer fresh buying opportunity which is to be taken early on sentiment. Daily, 4hour, 15min MACD and RSI pointing entry areas.
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