Natural Gas futures on the Nymex had a positive week before closing 2.85% higher than the previous one at $2.88. EIA reported a rather bullish build for this time of the year, of 15 Bcf in working underground stocks for the week ending August 21. Total inventory is currently at 3,184 Bcf, 0.9% lower y/y and 5.5% above the 5-year average.
We have started buying this market's dip since last month when we found it for a second time at its seasonal floor. We remain cautious in our operations because we feel that, despite the media hype of American Natural Gas, its fundamentals remain problematic enough. Of course we are traders, and we are going to respect its seasonality while buying any dip below the $4.00 level for the next few months. Support levels will be showing us the very next entry area. We have already taken a healthy 9% these last few weeks as the daily chart looked bullish enough, but we now need to see a well-respected support at $2.90 before operating at the continuation of the uptrend, anticipating the breakout. Despite the real European thirst for natural gas, which is also overhyped by most of the media, we need to hit some break at this start of the shoulder season. $2.90, then $3.20 and $3.50 have to be our next targets for the coming months. These same ranges can give multiple times the profit on our way to the January contract.
Fossil fuels are facing immense global pressure on a planet under even greater strain from the climate crisis. I have been arguing since 2018 that LNG tarnishes the reputation of natural gas as a commodity. While geopolitical shifts may favor it in the short term, we must not forget that the true competitors to the very last fuel to be burned on Earth are renewables and nuclear energy. And LNG, compared to pipeline natural gas, is even dirtier than that. Europe is already using 20% less natural gas compared to 2022. As early as the spring of 2022, I warned that American producers should not pin their hopes on Europe for greater market access—not even in Eastern Europe. It is domestic gas consumption for electricity generation that should be the primary focus. Given the clumsy actions of the US government in the Strait of Hormuz, who would have expected that the price of oil wouldn't hit $300 a barrel and gas $12? Stock markets and central banks are being very accommodating—as are the producers and transporters who sought to quickly find alternative routes to supply their products. They wouldn't want another round of defamation for their product. The price needs to be realistic. US macro data and the Dollar Index have to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.
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