Natural Gas: Greed Is Killing The Uptrend

Image by Vinzenz Lorenz M from Pixabay

Natural Gas futures on the Nymex had a positive week before closing 6.8% higher than the previous one at $8.71. EIA reported on Thursday a build of 89 Bcf in working underground stocks for the week ended May 20. Inventory currently at 1,812 Bcf, 17.6% lower y/y, 15.3% below the 5-year average steadily above the 5-year minimum.

We have no interest whatsoever in buying this market at current levels. Greed and bad calculations by most of market participants and by worldwide trading offices in reality, along with fixed articles in the news media, will ultimately kill this market's uptrend. The direction for U.S. natural gas is for $3.50 for the April of 2023 future contract. Fundamentals are going to kick-in sooner rather than later.

We are gearing-up for another season of selling short the U.S. natural gas. On any given exhaustion on the near term charts on directional trading. Αt the moment the price is the same as the European benchmark. In January, as China signed a 30-year contract with Russia, the U.S. price was $3.70. This happened at the same time when the U.S., for three months in-a-row, had already given Europe five times the volumes it had received from Russia for the same period of time. Even with all the potential excess quantity destined for the next ten years to Europe, in the best case scenario, U.S. exports will remain a 3/30 fraction of the total consumption.

The gas-fired electricity generation is the market share that American producers and midstream operators have to take care of. Competition from renewables and nuclear is picking-up fast. Utilities CEOs in Europe and around the world are asking questions about the use of natural gas in the power generation sector. At the same time when global methane emissions are at record high.

U.S. macro data and the Dollar Index have to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas. Happy Memorial Day! Allow me a month or two of easy living and holidays in the Mediterranean.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.
Stock Vamp 1 year ago Member's comment

Like the article says, fundamentals are going to kick in sooner than later.