Facts:
- NATGAS halted growth in a double-top pattern at 3,825
- US gas inventories returned above 5-year average despite subdued demand and high supply
Recommendation:
Short position on NATGAS at market price
- TP1: 3.375
- TP2: 3.100
- SL: 3.825
Opinion:
Gas prices remain relatively high despite subdued demand and high supply. Gas inventories returned above 5-year average, and recent weekly readings surprised with higher readings. Seasonality alone indicates that gas should not start to rebound until late June/early July, if the current demand-to-supply ratio becomes more favorable. At the moment, however, supply is still growing faster than gas consumption.
US natural gas supply and demand comparison. Source: Bloomberg Financial LP, EIA, XTB
Based on the above arguments, we recommend taking a technical short position at the market price. At the same time, we recommend setting a stop loss security order to minimize the risk of potential loss. We pay special attention to the high volatility that characterizes this instrument and the short-term nature of the recommendation.
Source: xStation 5
