Hey guys, welcome to another week.
I pressed Pause on any of the new analysis until now, because quite frankly, who knew that the Tariffs would play out this way.
This is how I see the current situation, and how I’m planning for the rest of this year.
Right now, we have quite a large mixture of affects in play.
Supply is steadily increasing, we’re hovering comfortably around 106.5bcf of supply, around 110bcf in total.
Demand is set to fall off after next week, as we continue to head into beautiful weather for the US.
Recession concerns have finally broken the back of Natgas, but this could be the begining.
On Wednesday, the major (large) Tariffs come into affect. If they aren’t paused or lessened, the markets could fall apart like nothing we’ve ever seen.
Oil’s outlook has been slashed down to $50 per barrel, most producers are looking to cut production, this will ultimately affect Natgas, as a part of the supply comes from Oil drilling.
Canada US relations have improved, relative to the rest of the world. So it’s fair to assume that their Natgas flows will continue.
Much of the world is looking to move away from US Natgas now, due to the “Blown up” relationships.
China has practically stopped Natgas imports.
Turkey is looking to massively expand the amount of Russian Natgas it takes, and transfer it to Europe.
I suspect no matter how Europe cuts it, they’ll always use Russian Natgas, either via a proxy, or directly.
This decreases the supply constraints in Europe, as does the forecast global recession.
Looking forward, if the Tariffs last and aren’t taken off. We could easily see Natgas prices below $2 in a years time, maybe sooner, as recession becomes more likely.
If Tariffs come off, I think the damage will already be done, and the recovery will be slower.
We have a strong Hurricane Season coming up, which should affect Exports, and Potentially demand, if the damage is wide spread enough. It’s expected we could see some extremely damaging Hurricane’s this year, as the dry air from Africa (which breaks up most major systems) is not expected to be strong this year. This means the potential for several Major Hurricane’s making landfall.
I don’t see a bullish case for Natgas at these prices.
Data Centres are being cancelled due to over-supply.
Coal and Oil is a lot cheaper, even now, to burn.
The damage to relationships could hurt projected exports.
Russia / Ukraine peace talks are still underway, with Progress expected on Wednesday or Thursday this week.
I’m continuing to add to my short positions. Targeting $3 still, then below $3, if everything aligns at the time.
I see a slow bleed lower for the rest of the year, maybe a slight pop at Summer, but ultimately a large downtrend.
Winter 2025 is expected to be quite warm. So any fears about supply constraints are BS.
There’s a lot floating around that can easily Damage Natgas, and things I haven’t even listed.
The only factor still in it’s favour, is a Deficit that has quickly disappeared, and will continue to do so.
Everything is changing Daily, so we must remain fluid.
First target, $3.5
Second Target, $3
Third Target, $2.8