UGAZ: Looking for a Bottom?

2020年5月12日

Natural gas futures contracts moved lower this week on low demand due to ongoing COVID lockdowns and warming weather. Support seen earlier at $1.72, has been broken. Next possible levels of support are $1.6 and $1.5. Another triple digit injection of around 104 bcf is expected on Thursday (EIA report). Supply-Demand deficit is expected to narrow: April -6.64 bcf/d; May -0.3 bcf/d; June - 1.99 bcf/d. Consumption growth is projected to keep slowing down: April +7.7%; May +0.3%; Jun +0.05% YoY (BlueGold Research). Supply is still stronger than demand in the near-term, unless companies will start filing bankruptcies.

MACD crossover for UGAZ on 2 Hr chart is pointing toward lower prices. If NG prices are to drop to $1.5, a bottoming pattern for UGAZ may form this week at around $17 -$15 levels. NG futures are oversold on 4 Hr chart, but may continue sliding on a daily chart. We may see a recovery after Thursday EIA report, once all the news is priced in.

2020年5月12日

注释

Two unfilled gaps remain on UGAZ chart, Gap 1 between $23.65 and $25.65, and Gap 2 between $31 and $35 levels. Gap 1 may get filled in the neat-term, however, Gap 2 may take until late July-August to fill. Since UGAZ is and ETN, it may continue going lower due to double-decay. Reopening of the economy would be a positive factor for natural gas, moving prices toward $2.5 level.