Natural Gas Dog Days Fuelling The Uptrend

Natural Gas futures on the Nymex had a volatile week before closing 1% lower than the previous one at $3.67. EIA reported on Thursday a bullish build of only 16 Bcf in working underground stocks for the week ended July 21. Inventory is currently at 2,574 Bcf, 17.6% lower y/y, 6.9% below the 5-year average.

The market has moved in our favor recently, after we had anticipated the change in direction and the early seasonal uptrend. We remain convinced about the temporary spot pricing so we want to stay focused on the near term charts while buying any dip coming our way until we reach a seasonal ceiling for the winter contracts. We wanted to see support at $3.20 and the recent Dog Days in the United States made us take even more profits. Any sign of exhaustion is to be bought back so range bound behavior will offer multiple times the profit on this positive momentum.

Fundamentals are still putting the breaks on this market and to be frank with you I have finally read the first positive radical development about Natural Gas in five years, since the 2016 lows. Bechtel contracted by Nacero Inc. is designing for the first time in history, a plant turning Natural Gas into clean gasoline near Penwell in Texas. Carbon capture capacity and hydrogen production at the same plant will put in place even more progressive thinking. The industry will have to compete hard with renewables for preserving the gas-fired electricity generation market share in the United States. Technically Recoverable Resources will still remain at record high. This applies also to oil, as oil to gas price ratio is starting to be concerning, no matter how much artificial cuts the OPEC+ will let in place. Peak demand is threatening a trillion dollar investments worldwide. Pricing will soon be the fossil fuel industry's last public relations argument and its biggest asset. I am expecting a $45-$55 oil barrel in 2023. U.S. macro data and the Dollar Index to be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.