HH Natural Gas At Low Inventory Level

Natural Gas futures on the Nymex had a bullish week before closing 13% higher than the previous one at $5.54. May contract is currently at $5.61. EIA confirmed on Thursday a draw of 51 Bcf in working underground stocks for the week ended March 18. Inventory is currently at 1,389 Bcf, 20.9% lower y/y, 17.4% below the 5-year average. Stocks remain above the 5-year minimum but in really shallow territory just before the new injection season begins.

We have started again the buying operations on calendar analysis, the market has already given 20% in uptrend and we now need to see a pull-back as this recent rally on headlines is looking ready to exhaust. We are going to buy any dip until we reach a seasonal ceiling of $6.50 later for the autumn contracts. The same ranges will give multiple times the profit on directional trading on the near term charts. Seasonality is going to be respected for another year because of the fundamentals. The momentum is looking really strong as the Daily MACD has crossed bullish recently.

The last European orders of American LNG are too small in volume but find the market at shallow inventory levels. Production remains at record high. EU demand of US LNG will gradually be for additional 50 Bcm per year until at least 2030. That is 1.7 Tcf at a time when the American domestic consumption is more than 31 Tcf. It is the same story on European soil, just as the United States fossil fuel industry is facing lately. Gas-fired electricity generation is going to meet even more competition from renewables and nuclear. Residential, commercial and even industrial demand will also suffer from the energy transition amid the climate crisis.

Vladimir Putin, the latest world leader acting as an oil and gas salesman, got his country into real trouble just because he was too slow in reading correctly the ongoing global transition. His economy and country had become a dinosaur without any flexibility, especially in the case of the oil market. How funny that was, Putin literally accepting Bitcoins(!) for oil and gas exports while nobody accepts his 140Bn gold ... We all have to reflect for a moment. The salesman has just discredited the fossil fuels even more.

Too many investors over the past couple of years have been reading correctly the RENIXX World Index, we first talked about this a few years ago, banks are to follow and too many of them are starting to put their money where their mouth is. The American Natural Gas industry, however, will have another golden opportunity to show that the commodity will really be the world's bridge fuel. It is abundant, cleaner than coal or oil and it has to be fairly priced.

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

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