Natural Gas Week Ahead: Floor To Be Tested
Dimitris Kontoulis | Jan 19, 2020 07:53AM ET
Natural Gas futures on the Nymex faced a negative week amid volatility closing at $2.00 on Friday, 7.80% lower than a week ago.
A bounce in the beginning of the week offered an opportunity for market participants to sell once again on this typical seasonal downtrend. EIA confirmed on Thursday a withdrawal of 109 Bcf for the week ending Jan.10. Working underground stocks keep decreasing at a normal pace and this just isn't fast enough as they are still 19.4% higher than a year ago following the last extraordinary refill season.
As we move closer to spring a question remains: how much lower than the $2.00 will the next floor be for this market before Summer's increase in demand?
Technically, it can move way below the $1.50. The March to April spread will offer a benchmark as soon as ranging is inevitable. This market looks abiding bearish as the 2016 lows still shaping its longer-term sentiment. The $2.50, however, must still be considered as a future rebound invitation even given the winter. Bounces are expected, both way spikes very typical on early momentum and speculation, which can offer fresh opportunities.
Demand for heating remains low to moderate yet U.S. housing starts are at 13-year high. This is another bearish sign. U.S. Natural Gas producers must now offer even more competitive prices to overseas importers and the commodity must compete with domestic renewables' increasing ability to offer cheaper cost for electricity generation. This market share is crucial. We like trading the shorter-term charts on season's direction so we do not have to overanalyze. Daily, 4hour, 15min MACD and RSI pointing entry areas. U.S. macro data and the U.S. Dollar Indexto be routinely monitored.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.