Natural Gas futures on the NYMEX had a volatile week before closing 2.2% lower than the previous one at $5.30. EIA confirmed on Thursday a build of 92 Bcf in working underground stocks for the week ended October 15. Total inventory is currently at 3,461 Bcf, 11.7% lower y/y, 4.2% below the 5-year average. Just 1% more since last May when price was at $3.00. And this is where we are heading for the coming Spring contracts.
We have stopped the buying operations since more than a month ago. We have been selling rallies on exhaustion since then, on near term charts. Resistance at $5.75 for the next contract will affirm the post-winter downtrend. Then we will look at the $4.80 level for a new one.
Support levels must be respected. The same ranges can offer multiple times the profit. The market has already offered us 25% after reaching the seasonal ceiling. Fundamentals are coming into play.
The latest world leader acting as a salesman for Natural Gas companies is Vladimir Putin. President Trump had tough times in finding new clients for four years. The producers are overreacting because of new legislation being put in place around the world. The gas-fired electricity generation market share is very fragile because of renewables. Even the nuclear lobby is back for good.
In the near future and after some trillion dollar in damages because of the climate crisis, the fossil fuel industry will be left with only one marketing tool, pricing. Any non affordable production will be nationalised because of how crucial the commodity remains for human development. Any arguing about lack of investment or LNG exports are irrelevant at this point. Rigs are coming online at anytime. Technically Recoverable Resources are at record high worldwide. President Putin days ago was selling Natural Gas by arguing how many trillion cubic meters are available for the Nord Stream. Natural Gas is endless, he said. China has just confirmed peak demand is coming in 2026 for its oil and gas needs.
Back in the U.S. where gas-fired electricity generation accounts for more than 40% of total consumption, May 2022 contract is currently trading at $3.90. June 2024 is trading at $3.00. We have been talking about all the above for years. Speculative spikes are always offering hedging opportunity for many market participants at this time of year. Fundamentals have to be taken into account. We must respect seasonality. U.S. macro data and the Dollar Index should be routinely monitored. I have not even talked about any coming tapering from the Fed.
Daily, 4hour, 15min MACD and RSI are pointing to entry areas.
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