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 Aug. 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 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 already anticipated the post-winter downtrend. 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 will be needed amid global tensions while we trade the shoulder season contracts on larger volumes. We stay with the near-term charts. The same ranges are giving multiple times the profit. We have no interest in buying operations.
Allow me some macro aesthetic. Natural gas has been very expensive lately, with no fundamental justification. I have been reading paid articles on major networks that make me laugh every week. This is not a smart way to do public relations.
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 they can compete for goods crucial to human development as if they were selling cufflinks.
They are already seeing the price caps being put in place. Many utility CEOs worldwide 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 having will be its price.
U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.
