Natural Gas

Natural Gas Faced Negative Week Closing

Natural Gas on the NYMEX faced a negative week closing 12.4% lower than a week ago at $2.25.

EIA confirmed on Thursday a build of 70 Bcf for the week ending September 4 which is considered enough bearish for this time of year. Inventory is currently 17.6% higher y/y. 13.1% above the 5-year average. As fall contracts tend to exhaust before one last winter spike on seasonality.

The January contract has lost just half of this exhaustion, so we remain positive about a higher direction precisely on seasonality. That last Daily MACD bearish crossing had us warned two weeks ago and it is probable that range-bound behavior will emerge for the coming month.

$2.00 must offer support eventually. Besides, hurricane Sally could offer another spike immediately. The next 4hour MACD crossing will show enough positive momentum. Daily will bring back the uptrend sentiment for this market. This might take a few more weeks or so. That is why physical trading volumes are so important to follow. We don’t want to pay too much attention at LNG exports at this point, as the domestic demand absorbs more than 90% of the Natural Gas produced in the United States. U.S. economic recovery is far more important. Supply and demand have recently showed extraordinary resilience amid the COVID crisis. The doller Index to be routinely monitored as well as U.S. macro data.

On the technical front, the Natural Gas RSI is at 48.914% and suggests that the market can move in the downward direction. The current price is trading around 5 days MA and  below 20 days Ma amd above 50 days moving average. The stochastic is forming an upside crossover.

Overall Bias is positive and Short-term buy trades can be initiated with below mentioned Stop Loss and Profit targets.

Trade Suggestion– Buy Natural Gas At 2.380 Take Profit At 2.457 Stop Loss At 2.303