Natural Gas: Anticipating The Post-Winter Downtrend


Natural Gas futures on the Nymex had a volatile week before closing 4% lower than the previous one at $8.90. EIA confirmed on Thursday a rather average build of 61 bcf for the week ended August 26. Total Inventory is currently at 2,640 Bcf, 7.9% lower y/y and only 11.3% below the 5-year average. The refill season is expected to close in November at around 9% below the 5-year average which will be totally fine amid this extraordinary year. We have been talking about this since May.

The price offered us another gift. We have been selling rallies on exhaustion as we have been anticipating the post-winter downtrend already. The natural gas has been ridiculously expensive lately. The latest divergence on the 4H chart offered another 10% immediately. We expect Natural Gas to trade around $3.50 for the April contract. We now want to see resistance at $8.50, then $5.50 on our way to April. Surgical accuracy is going to be needed amid global tensions while we trade the shoulder season contracts on larger volumes. We stay with the near-term charts on directional trading. The same ranges are giving multiple times the profit. We have no interest whatsoever in buying operations.

Allow me some macro aesthetics. Natural gas has been very expensive lately, with no justification in terms of its fundamentals. I have been reading paid articles on major networks and make me laugh every week. This is not a smart way to do public relations. Semi-demented people after a couple of strokes, trying to convince the planet that they need them... Bragging about how good producers or traders they are while 30 million Pakistanis are left homeless due to floods. While hundreds of million dollar mansions are being lost in the US due to wildfires. They live in their world blinded by greed. They pull off the biggest fossil fuel smear in history.

I'm not even wasting time explaining natural monopolies and regulators. Not even how a democracy works. The U.S. would probably need a doubling of unemployment and a recession to get inflation down to 2%. Probably all Western countries will need this. Inflation for which only two industries in the world are responsible. Fossil fuels and shipping. The cost of transporting American crude has gone up 12 times in the past months. Tripling the cost of transporting American LNG. Some feel that they can compete for goods, that are so crucial to human development, as if they were selling cuff links. They are already seeing the price caps being put in place. Already many utility CEOs around the world, don't even want to hear about natural gas being used for electricity generation. For years I have been saying that if natural gas wants to be the bridge fuel amid the energy transition, the only marketing tool will end up to have will be its price. Let's all behave accordingly.

U.S. macro data and the Dollar Index to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

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