Natural Gas Resistance At $5.75 Affirms The Downtrend
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.
I wonder if you are a perma-bear on natural gas. You were saying it was expensive at $4 over the summer. You are now 'affirming the downtrend' the day before futures spike over 4% to start the week.
the week is young and the month is even younger. Refill season isn't even over yet. Ok I have some time. Being perma in anything is a bad thing... Ok maybe you can believe in crypto after God, I don't know. Natty loves us because of the directions it is taking. Cyclical or not. I do directional trading on near term mainly. The $5.75 resistance will affirm the downtrend, not me, we are not even there yet wait for the daily macd, because I am not moving the market. Although I have many clients and readers I am not alone here- you see. Neither I got 2bn to get in and get out in mins on the secondary market on algos thinking. Physical is still a good thing you know. You can believe the latest Bloomberg article paid by a bank who seized production operations last year amid the industry's consolidation, talking about $40 gas anytime soon. Oil and Gas corporate debts are unbelievably high they might start to thing it's you and me we are going to pay for it. Saudis are, in reality, Aramco the biggest corp in the world is giving to bond investors half the value the Greek Public Electricity company is giving to theirs... 2.8% Lol. Call it stinginess or paying for diversification because of the climate crisis. You are free to do that. To believe in any story. Be aware most of my clients are midstream ceo's and utilities managers. For a reason... Oil Im telling you will hover around $55 in late 2023. Who is writing about it? Nobody. But you can believe a $200 barrel oil story if you are to give your money to a bank investing them for you for 3% a year. Packaging oil futures with Swiss index calling the investing program "safe haven for you dear client" or something. Do it if you want. Commodities have been my field for ten years precisely because they fulfill real consumer's needs. And you can do options too. You don't get NG12 and then NG13 and then NG1500 update paying for nothing every year. Ok maybe for the new t-shirt at the press conference. I don't do marketing or pr. I am a trader. Not even a strategist. I heard Paulson today talking about crypto a bubble just like "a limited supply of nothing". Great words just before the regulation kicks in. Commodities are too important for human developent to be experiencing extreme volatility. I m not even talking about Natural Monopolies. Back in May I first wrote about 4- $4.5 ceiling, when price was at 2.8... Who talked about $4.5 when we were at $2? Who gave the right direction? It went to 6. Wow, even better! And Im writing about how greedy we do not have to be after getting our 60% and how much contempt we feel about anything above the 5. Because of seasonality and fundamentals... Of how we first need to let the market decide for us. It's all there. Even Goldman Sachs head of commodities has been reading it all wrong for three years in a row. I have been correct for ten years. 2016 lows came for a reason for NG in the U.S. It is not my fault. Read, carefully, read past analysis, here at talkmarkets, investing.com mainstream portals. Have been writing for natty for four years. See if I m any away from the market... I am not. Thanks so much