Natural gas futures on the Nymex bounced this week amid this latest post-winter downtrend. December contract closed on Friday, 3% higher than the week before at $5.79, currently settled at $5.68. EIA reported another bearish build for this time of year of 55 Bcf in working underground stocks for the week ended Oct. 21. The refill season is being prolonged while total inventory is currently at 3,304 Bcf, 4% lower y/y and only 5.5% below the 5-year average.
We wanted to see support at $5.50 before letting the market decide for us, and this is the case. The price bounced, and we now want to take a breather before selling the next Daily crossing on our way to $3.50 for the April contract, which is currently trading at $4.67 on decent volumes.
We first warned about all this fake hype about natural gas back in May. Too many flawed calculations out there, by most market participants on paid headlines, in reality, by the largest oil and gas companies, trading offices, and shipping companies. Lies have small feet. The market has rules. Technical and fundamental.
We do not want to become too greedy about this idea after taking 60%. We need to start identifying a floor for the Spring contracts. The total E.U. imports from the United States will remain low. All exports will only be a 3/30 fraction of the total domestic demand. So the gas-fired electricity generation market share has to be preserved at all costs, especially when many states decide to ban the use of natural gas in residential and commercial buildings.
Putin is losing the war. A war that started from his puzzlement in front of the energy transition. For twenty years, he did nothing about it. His country still makes half of its GDP from the fossil fuel industry. At the same time, more than 70% of the Russian population lives without a central heating network. A lesson is to be learned by many other countries in the world. Most belong to OPEC.
natural gas will have a single value for the foreseeable future. That of the cheap energy source, as it will remain abundant but polluting, especially in its LNG form. Anyone who tries to convince at this time that natural gas is something expensive is doing a disservice to the demand of the next decade. I have been talking about this for years.
U.S macro data and the Dollar against majors have to be monitored routinely. The latest strong results show that only two industries have been responsible for inflation. Fossil fuels and shipping. Politicians in Western Democracies should address both of these problems before they let central banks raise interest rates and create unemployment.
The picture is much better now than it was four months ago. Thanks to cheaper energy. There is more work to be done. I believe that the Dow Jones Industrial Average and the S&P 500 are the next apparent markets in an uptrend to follow. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.