Increasing US storage build bearish for natural gas prices
US natural working gas storage increases accelerated last week. Increasing working gas supply is bearish for natural gas price. Will the natural gas price continue declining?
The US Energy Information Administration (EIA) last Thursday report showed US natural gas in storage increased by 69 Billion cubic feet(Bcf) to 2.636 Tcf for the week ended September 7. The increase was more than previous week’s 63 Bcf build. It was also higher than the 65 Bcf expected increase. And while the current level of gas stock is 18% below the five year average of 3.232 Tcf, the increasing rate of gas storage build is bearish for natural gas prices.
On the daily timeframe the NATGAS: D1 is below the 200-day moving average MA(200) which is falling, this is bearish.
- The Parabolic indicator gives a sell signal.
- The Donchian channel indicates downtrend: it is tilted lower.
- The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
- The Stochastic oscillator is testing the oversold zone but has not breached into it yet.
We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 2.744. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 2.869. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (2.869) without reaching the order (2.744), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 2.7440 |
| Stop loss | Above 2.8690 |