Natural Gas on the Nymex had a volatile week before closing 3.3% lower than the previous one at $1.75. EIA reported on Thursday one more bearish draw of 36 Bcf in working underground stocks for the week ending March 22. Total inventory is currently at 2,296 Bcf, 23% higher y/y, a whole 41.1% above the 5-year average. Both percentages have been in the ascending for quite some time, as the pace of reduction of stocks in storage this winter remains 25% lower than the 5-year average.We want to place our Call Options on time for next winter. The December contract is currently trading at $3.44 and gives us a nice benchmark for the average expecting pricing by most of the market participants. We need to identify this seasonal floor first which will give another buying momentum for even more forward contracts trading in larger volumes early. I believe that these latest $1.00 contracts during the winter even, and shoulder season, make this market very technical. We need to start some buying operations on the near-term charts following this post-winter downtrend. The latest 4H MACD crossing offered a nice momentum from an oversold RSI. I believe we should be looking at a seasonal floor. $1.70 – $1.50. The market will eventually break-out in uptrend later in summer because of higher consumption and less active rigs. The total rig count by EIA of 624 active rigs is currently 17.6% lower than a year ago just before the new injection season begins. Resistance at $2.30 should remain resilient for another couple of months though.The state of the American economy looks in very good shape. The main reason for this is the continued de-escalation of energy prices which no longer keep hostage all other sectors of the economy. No one expected current interest rate levels for such a long period of time in conditions of a close to full employment economy. U.S. macro data and the Dollar Index must be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.More By This Author:Natural Gas: Working Underground Stocks Too High
Natural Gas: Selling Rallies On Exhaustion
Natural Gas: Looking At A Seasonal Ceiling