Natural Gas At Old Resistance, Offering Fresh Selling Opportunities
Dimitris Kontoulis | Feb 06, 2021 10:31AM ET
Natural Gas on the Nymex had a very volatile week before closing 12.9% higher than a week ago at $2.88. EIA confirmed on Thursday a withdrawal of 192 Bcf in working underground stocks for the week ended January 29. Total inventory currently at 2,689 Bcf, 1.5% higher y/y, 7.9% above the 5-year average.
The recent blizzard in the North-East made the market wanting to rally from recent lows before meeting old resistance at $2.90. The market had got shallow and oversold for a while, ranging after hitting new lows at $2.25 on a downtrend. Demand is definitely looking better than it did in the beginning of the withdrawal season and exports have been picking up. Have this market found the buying volume's deficit from past Autumn? The answer is no. We are considering this move as a gift really, offering another selling opportunity on calendar analysis. We have no interest whatsoever in buying Natural Gas contracts, not before next May. We have been selling short the near term charts on directional trading since we identified a seasonal ceiling back in November.
The downtrend has lost momentum on colder weather in the Lower 48 and the latest spike, but its sentiment remains well built just a month before trading the new injection season's contracts in larger volumes. Surgical accuracy will be needed before the Daily MACD crosses red again. We still have to see resistance at $2.60 to feel better about lower lows. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing entry areas.
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