Weclome to another week everyone, as we head toward the end of another month.
We have a lot to watch for, Natgas is probably headed for another volatile time, as we head into demand season, with the mix of a very strong expected Hurricane season.
Over the weekend, demand stay at or under 100bcf, but production is continuing to creep higher.
We’re comfortably over 106bcf on daily Natgas production, and around 114bcf in total daily production, which is very strong.
Add to the, Coal power is slowly creeping online, Solar and Wind is picking up as the Spring / Summer weather takes hold.
As of right now, that’s spells bad news for Natgas markets.
The weather doesn’t appear to be helping demand much either. From everything I can see in the forward models, we’re comfortably in the 70s to 80s, with some regions in the 90s during the day, but cooling off to the 60s and 50s overnight. Honestly, the US has pretty nice weather right now.
What is heating up very quickly is the Gulf of Mexico / America. The Gulf has been heating up rapidly, which is creating almost perfect Major Hurricane weather. And with not much dry wind expected from Africa to weaken any systems, it’s only a matter of days or weeks before we see our first Major Hurricane.
Personally, I think we’re headed on a choppy trajectory down, ultimately breaking below $3, due to the confluence of a perfect “bearish storm”.
To summarise, we have alternative energy coming in and picking up some of the slack.
We have stronger production coming online.
We have weak summer temps (for now), and the models aren’t showing any major changes.
And to top it all off, the Gulf of Mexico is prime for a major or super system to come in and take out exports / destroy infrastructure, leading to demand destruction.
On the bullish side, we don’t have peace talks with Ukraine or Russia, anytime soon it appears.
Exports are semi strong, but Europe has plenty of time to rebuild stocks, which are sitting at about 50% right now.
Ultimately, I’m looking for a move into the $2s for everything. At that point, I expect the speculators will be run out of the market, and we’ll be left with the good old days.
After that, I’ll be looking to spot / find the dip, and buy it ahead of winter. If the Enso cycles and current projections hold, we could see another cold winter, and thus, a strong bull run.
What I’m watching right now:
Daily Hurricane update from the models and NOAA
Production / Demand
And the current storage level vs 2024 (last year).
Storage forecast for the end of September are showing a very strong storage level, which indicates we have much more downside, in my opinion.
Good Luck this week traders. Stay fluid, trade the market we have, not the one we wish we had.