Hey Guys,
Here we are, Fundamentals are bearish, but Natgas stands tall as uncertainty keeps some support under price, the question is, for how long?
These things tend to reach a turning point where a catalyst finally gives the market what it needs to re-align. It could be Ukraine peace, it could a very bearish EIA report, you won’t really know what it’ll be, suddenly, the market will re-align and you generally won’t see it coming.
Right now, Production is still increasing, demand is falling off a cliff, and the next 8 EIA reports are highly bearish. Normally this would be enough to wipe out Natgas.
One of the main factors, is Canada Tariffs. The market is very scared that Canada might stop supplying the US with it’s exports, which will leave a roughly 5.5bcf hole.
For now, nothing the market is pricing has come to pass yet.
Canada is still supplying the US.
Europe hasn’t run out of Natgas and sits at around 36% storage.
I’m personally still positioning for the snap I expect lower. It doesn’t mean we can’t see a bit more of a rally, but volume is drying up.
Funds won’t want to add long here, and after Monday, many are afraid to go short.
My goal is still mid to long term. Eventually Fundamentals always matter, it’s a just a question of when?
Demand doesn’t look like it’ll increase for at least 12 to 16 weeks. The next demand period being Summer, we’ll see if it’s another warm one or not.
My expectation is we’ll return to the $3 to $3.5 range once these Bearish EIA reports start hitting and increasing storage more than expected. Effectively wiping out the deficit within 12 weeks.
Potential threats to that, if we get more demand weather come through or if Canada cuts supply.
I’m sure many in government are eyeing the extremely high Natgas prices, which is going against their low energy Policy.