Welcome to another week everyone.
Thing’s I’m watching for and thinking about.
The weather has turned quite warm now. I think it’s safe to say winter will be past us shortly.
As of writing this, there’s a bit of cold still hitting the North, but not the high demand area.
The models are showing a mix of strong warmth and light cold days ahead, which should significantly lower demand.
Power burn by the power suppliers is tanking as they all switch to Coal or other alternatives.
This is ultimately bearish for 2 reasons.
The first, is as they switch to Coal, Natgas usage obvious decreases, and so, producers won’t be turning over as much profit.
And then because of this, Producers will then be forced to continue brining more supply online to help lower prices back to where Power Suppliers can afford to start burning NG again.
Higher prices might be nice for now, but ultimately, it will always damage demand.
Tariffs are set to be announced soon, Trump has indicated that they might not be as damaging or as harsh.
Canada’s Tariff’s should ultimately be lifted, and only items they Tariff, will be hit back. Hopefully, this means energy from Canada will flow freely again, adding to US supply. Something important to keep an eye on.
Right now, price is fighting to hold the Daily 50ema, but also $4.
I don’t see this holding at all, as the fundamentals continue getting more and more bearish.
I believe that eventually, Fundamentals will weigh so heavily bearish that we will see the long awaited snap, Maybe a 10% to 15% down day, which should break the bulls completely.
The key to watch now, is the Daily 50ema, Canada flows, Power burn and obviously Production.
I suspect we’re headed back into a glut, as the very early forecasts show that summer might not be as hot as previous years, and that winter 2025 will likely be a lot warmer. More like winter 2023 to 2024.
I’m personally continuing to scale in, bit by bit, as I await the eventual trend change.
I still foresee $3.5 in the near future, ultimately I expect we’ll see the $3 to $2.5 as producers offset the current deficit.
We’re too richly priced considering the Deficit only sits at 7% as of today, roughly 130bcf below the 5 year average. Which is easily recoverable with 1 or 2 strong reports.