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The natural gas bulls held out as much as they could last week, ignoring a higher-than-expected government storage ratio, before succumbing to forecasts calling for milder temperatures in mid-May and several forecasts. other three-digit storage before the summer season begins. Spot gas prices also declined as current weather conditions reduced demand for products.
Last week, June natural gas futures contracts were $ 2,567, down 0.013 or -0.50%.
For most of the week, prices remained steady at around $ 2,623, even reaching $ 2626 before prices closed at Friday's close. NatGasWeather was surprised by the recent strength of its prices, saying prices had firmed up earlier in the week "apparently for other reasons, making it unclear whether price support would continue "at the beginning of the new week.
Andy Weissman, CEO of EBW Analytics Group, said: "Recent price developments in the futures market point to a bullish sentiment badociated with" strongly bearish "fundamentals."
"The natural gas market continues to act as if it wanted to go higher, the June contract yielding only modestly despite a mbadive injection of 123 billion cubic feet" according to the data weekly storage, a figure "far above market expectations or any previous injection in April," says Weissman.
Last week, it sometimes seemed like there was real buying in the market, as opposed to short-term hedging, but we will not know until we see the traders' reaction to a short support zone term between $ 2,552 and $ 2,534. If buyers intervene to support the market in a downturn in this area, look for a higher performance trough to bring prices down to $ 2,623 to $ 2,626.
As Weissman says, "bullish sentiment could help the previous month maintain support early in the week ahead, although the prospect of a drop in demand to a record level" at the end of the month May, draws a picture "dark" for the bull. "
Weekly forecasts
Here is the situation at the beginning of the week. Expected low demand as well as another construction of three-digit inventories. It is potentially bearish, but do not say it to the current bulls. The recent evolution of the prices shows the respect of a pair of technical levels of 50% with 2,552 and 2,623 dollars.
If the technical support area between $ 2,552 and $ 2,534 starts attracting new buyers, we could witness a new test of $ 2,623 to $ 2,626.
If $ 2,552 fails, look for a sale of at least $ 2,534.
Once again, weather forecasts, demand and potential levels of technical badistance will control price developments. The fundamentals are bearish, but the feeling is still strong. The market will remain strong until the last buyer of the counter-trend is moved away from the long side.
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