Natural Gas: Value Buyers Could Step In At $4.726 Before Inventory

 | Nov 10, 2021 11:59AM ET

Analyzing the pre-inventory announcement – an early event this time that could be a turning point for natural gas futures today as the value-seeking investors have been patiently waiting at $4.726 for a long time.

Since the natural gas futures started to move downward after this week’s gap-down opening, selling spree continues to be a regular affair till now. Value-seekers look ready to come forward before the weekly stockpiles announcement that could generate a steep reversal from the current level.

I find that growing doubts over the lesser heating degree days are increasing bearish sentiments. But from the mid of November, the winters could knock at the door with cold weather in most parts of the world, which is evident from the growing export of US LNG.

On the other hand, inflation could delay in completion of additional production facilities. And, this could continue to lead to tight supply till 2025. Inflation is not transitory and the denting impacts of pandemics could continue to create a hurdle for the foreseeable future.

Currently, we are trading December futures of natural gas, which is the month of testing seasonal highs before turning downward. Shifting weather outlooks will increase volatility during the first two weeks of November.

Still, the rest of the upcoming weeks could continue to see repeated bullish attempts to cross the psychological resistance at 6 before a final effort to sustain above $6.5 during the first week of December. On the lower side, the natural gas could see value-buying support above $4.5, increasing volatility during this month.