Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Natural Gas Back In ‘Buy Zone’

By ETF Daily News (Andy Hecht)Market OverviewMay 21, 2020 13:48
ca.investing.com/analysis/natural-gas-back-in-buy-zone-200436796
Natural Gas Back In ‘Buy Zone’
By ETF Daily News (Andy Hecht)   |  May 21, 2020 13:48
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

It appears that natural gas went from five months of steady declines to a bouncing ball. The energy commodity that is like crack cocaine because of its attraction to market participants that thrive on volatility looks awful when falling and sexy when rallying.

After falling back below $1.60 last week, the price rallied back to a high of $1.889 this week. The energy commodity ran out of upside steam and was back at the $1.70 level on May 21. The price variance in the energy commodity is offering bulls and bears that have their fingers on the pulse of the market plenty of profitable opportunities these days.

On Thursday, May 21, the Energy Information Administration released its latest inventory data for the week ending May 15. After two consecutive weeks of triple-digit injections into storage, the market expected a slightly lower inventory build. The United States Natural Gas Fund (NYSE:UNG) tracks the price of the energy commodity higher and lower. The natural gas addicts prefer the short-term (NYSE:UGAZ) and (NYSE:DGAZ) products as they turbocharge the price action with an added dose of volatility.

The Market Expected A 98 bcf Injection

According to the crowdsourcing Website Estimize, the market had expected an inventory build of just below 100 billion cubic feet for the week ending May 15, going into the weekly data report from the Energy Information Administration.

(Source: EIA)

As the chart highlights, 81 bcf flowed into storage for the week ending May 15. Total stockpiles stood at 2.503 trillion cubic feet, 45.2% above last year’s level, and 19.4% higher than the five-year average for this time of the year.

(Source: EIA)

As the 10-minute chart illustrates, despite the lower than expected build in stockpiles, the price action was bearish after the latest inventory data from the EIA.

Trend Continues

The percentage over the five-year average fell from 49.2% over the level from the week ending on May 8. The trend lower continued, as the May 15 data marked the ninth consecutive week.

(Source: CQG)

The weekly chart shows that natural gas broke out of the bearish trend from November to March when the price rose to a high of $2.162 in early May. The price then fell to a higher low of $1.595 last week, bounced to $1.889, and failed. After the latest data, which was not bearish, the price was back at just over the $1.70 level on Thursday, May 21.

Price momentum and relative strength metrics were below neutral readings on Thursday. Weekly historical volatility at over 55% remained near the highs of 2020 as weekly trading ranges have been wide. Open interest at 1.247 million contracts as of May 20 was below last year’s level at 1.312 million. The weekly chart displays a market that is likely to remain in a tightening price range.

Natural Gas Rejects Lows And Highs

When it comes to the path of least resistance for the price of natural gas over the coming trading sessions, the $1.595 to $2.162 per MMBtu trading range since May 6 is likely to remain intact for the near term.

(Source: CQG)

The mid-point stands at $1.879 per MMBtu. Buying scale-down below the pivot point and taking profit above is likely to be the optimal approach to the natural gas market. At just over $1.70 on March 21, natural gas is back in the buy zone.

The United States Natural Gas Fund was trading at $11.33 per share on Thursday afternoon, down $0.46 (-3.90%). Year-to-date, UNG has declined 51.42%, versus a 10.94% rise in the benchmark S&P 500 during the same period.

UNG currently has an ETF Daily News SMART Grade of F (Strong Sell), and is ranked #66 of 112 ETFs in the Commodity ETFs category.

Natural Gas Back In ‘Buy Zone’
 

Related Articles

Ross Hendricks
The Pandemic Boom Goes Bust By Ross Hendricks - Jan 29, 2022

The Pandemic Boom Goes BustWelcome to the great fiscal hangover. Over the last 18 months, the U.S. economy enjoyed the greatest stimulus infusion of all time. More than $5 trillion...

FactSet Research Systems Inc
Podcast : Financial Market Preview - Friday 28-Jan By FactSet Research Systems Inc - Jan 28, 2022

US equity futures are indicating a flat to slightly lower open as of 05:00 ET. European equity markets broadly lower, following mixed but mostly higher levels in Asia. Fed rate...

Natural Gas Back In ‘Buy Zone’

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Ed Crain
Ed Crain May 22, 2020 10:10
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Natural gas is just riding on the coattails of oil. End of story. 🤫
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email