Welcome to another high impact day.
Firstly, we have Trump & Putin’s call today.
Putin has indicated he really wants Russian energy to be released back to the market.
Trump is obviously very keen to continue lowering Energy prices. Those 2 wishes speak for themselves.
Demand wise, the weather continues to show mild demand.
There is a little dip around the 20th to the 23rd of slightly higher demand, put projections are showing the Deficit is still on track to wipe 80bcf to 90bcf off the deficit within the next 4 weeks.
That leaves a lot of room for storage to continue recovering.
Add to that, recession fears. US GDP now forecast is at -2%, which is quite bearish for the US.
A struggling consumer and struggling GDP implies low growth and by extension, low demand.
Production continue to remain steady at around 106bcf, which is good.
Many power producers are currently switching to Coal instead of Natural Gas.
Power producers have a $3 to $4 threshold for Natgas Prices. As soon as prices hit those highs and remain there, they start cutting over to Coal, a lot cheaper.
If power producers find these prices expensive, how do you think the consumer feels?
Residential demand has fallen off a cliff as many can’t afford these insane prices, it’ll likely remain there until we drop into the $3s.
On the Horizon, we have Hurricane season.
Hurricane season start from June 1st. Forecasters are expecting 10-20 Hurricanes, half of them being named storms.
In Summary, there are a lot of headwinds ahead that are bearish for Natgas.
Especially when you’re trying to justify prices at or above $4.
Fair prices with demand and deficit considered, should be around $3.5 to $3.6.
The next 2 weeks reports are extremely bearish and will wipe around 3% off the total deficit.
In my mind, it’s only a matter of time before we venture below $4.
For now, speculation and retail buyers are holding the line, for now.
Around 69% of retail across the majority of platforms are buying.
The majority of Funds and Producers are selling.
Long term, I still foresee $3 by June.