Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Natural Gas: Resistance At $8.50 Confirms The Downtrend

Published 09/18/2022, 04:56 AM
Updated 07/09/2023, 06:32 AM

natural gas on the NYMEX had a very volatile week before closing, 2% lower than the previous one at $7.81. EIA reported on Thursday, a rather bearish build of 77 Bcf in working underground stocks for the week ended Sept. 9. Total inventory is currently at 2,771 Bcf, 7.4% lower y/y, only 11.3% below the 5-year average.

Natural gas 4-hour chart.

The market gave us another 9% fast. Price got scorned once again from incredibly high levels. The recent rail deal with labor unions did enough to avoid another supply-chain and commodities crisis in the United States.

At least, that was the excuse for the recent spike in natural gas in most of the pricing hubs. Since last May, we have been selling rallies on exhaustion on the near-term charts, anticipating the post-winter downtrend after we first identified a seasonal ceiling for natural gas.

The latest $8.50 resistance level has to do enough and confirm our strategy. We have no intention whatsoever of buying this market. The direction is for a $3.50 April contract. Any spike will have to be sold immediately.

Vladimir Putin, the last world leader acting as a fossil fuel salesman, is now begging Europe to take his Nord Stream 2 flows. Europe won't even be needing Nord Stream 1 in a while. In the best-case scenario, Europe will only need a fraction of 1/30 of total U.S. consumption in the next decade.

That will bring the total American exports to 3/30 of the total domestic demand for natural gas. The crucial domestic gas-fired electricity generation market share will only be preserved on lower pricing amid competition from renewables, nuclear, electrification, and the energy transition in general.

We have been warning about this since April. The IMF argues that global investment in renewable energy needs to increase fivefold or even tenfold for some scenarios and countries over the next decade.

U.S. macro data and the Dollar against majors are to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.