After A Volatile Week For Natural Gas, What Is The Forecast Ahead?
Alexandros Yfantis | Nov 17, 2019 11:31PM ET
Natural Gas on the Nymex had a volatile week closing at $2.67 on Friday, 3.90% lower than the previous one. Thursday’s EIA report confirmed only 3 Bcf in working underground stocks have been injected for the week ended Nov. 8.
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Three weeks ahead of calendar, the market is sitting on 500 Bcf more stocks from year to date, despite the fact that more than 20% of rigs remain offline while additional online production is keeping up with demand. LNG exports are just slightly lower from last year’s record-high levels. Thus much will be defined by the pace of reduction of this large stock due to higher winter demand.
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Since the summer’s floor, we like to buy the dips as seasonality feature comes to play and any pullback is offering a fresh opportunity. We took more than 20% twice already on directional trading. For the week ahead we need to stay vigilant and ask for some surge in green trading volume before we start buying again as Daily MACD is very close to a bearish reverse which would slow down the market’s direction for another couple of weeks.
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Price is moving typically inside a range formed on a plateau. The latest U.S. macro data are in favor of an even more aggressive winter spike, but this market has been facing strong fundamentals for some years now and appetite for short term use for hedging might not be the same as last year’s since green lately is to be seen almost across the whole board.
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Headline risk due to U.S.-China trade talks are also in decline. U.S. housing and flash PMI data is expected this week. The price is 42% lower than a year ago. We do not have any temptation whatsoever to short this market at this time of year. Dollar against majors is to be closely monitored.
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Daily, 4hour, 15min MACD and RSI pointing entry areas. Daily EFI above zero.
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