Natural Gas Price Prediction – Prices Rally on Warm Weather Forecast

Natural gas prices rallied sharply, rising more than 3.2% and demand continues to outstrip supply. The weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. Tropical storm Sam has formed in the Atlantic but its unlikely to impact any natural gas infrastructure.

Technical Analysis

Natural gas prices surged, rising 3.2%, closing above resistance that is now support near the 10-day moving average at 5.09. Additional support is seen near the 50-day moving average at 4.33. Resistance is seen near the September highs at $5.65. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term negative momentum is decelerating as the MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

The EIA sees More Demand

The EIA reports that the industrial sector of natural gas consumption will rise throughout 2021 and exceed pre-pandemic 2019 levels. They forecast that growth to continue into 2022, and natural gas delivered to industrial consumers will average 23.8 billion cubic feet per day that year. If realized, this amount would be near the current record high for annual industrial natural gas consumption set in the early 1970s

Oil Hits Highest In Almost 3 Years as Supply Tightens

The rally was slightly dampened by China’s first public sale of state crude reserves.

Brent futures rose 84 cents, or 1.1%, to settle at $78.09 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 68 cents, or 0.9%, to settle at $73.98.

That was the highest close for Brent since October 2018 and for WTI since July 2021, both for a second day in a row.

It was the third week of gains for Brent and the fifth for WTI mostly due to U.S. Gulf Coast output disruptions from Hurricane Ida in late August.

New York Harbor Ultra Low Sulfur Diesel (ULSD) futures also closed at their highest since October 2018.

“As oil prices are on track to close another week of gains, the market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand,” said Louise Dickson, senior oil markets analyst at Rystad Energy.

Some disruptions could last for months and have already led to sharp draws in U.S. and global inventories. [EIA/S]

U.S. oil refiners were hunting to replace Gulf crude, turning to Iraqi and Canadian oil, traders said.

India’s crude imports rose to a three-month peak in August, rebounding from July’s near one-year low.

Some members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have struggled to raise output due to under-investment or maintenance delays during the pandemic.

Russia said it will remain a reliable supplier of energy to global markets. Russian gas giant Gazprom had been accused of doing too little to increase its natural gas supplies to Europe, where prices have soared.

Iran, which wants to export more oil, said it will return to talks on resuming compliance with the 2015 Iran nuclear deal “very soon”, but gave no specific date.

Edward Moya, senior market analyst at OANDA, said: “Extra Iranian barrels of crude seem unlikely to be a 2021 story,” noting negotiations “will be a long drawn-out process.”

Kazakhstan’s biggest oil producer, Chevron-led Tengizchevroil (TCO), will delay components of its $45.2 billion expansion project by three to seven months.

In the United States, drillers added 10 oil rigs this week, putting the oil and gas rig count up for a 14th month in a row.

Brent could hit $80 by the end of September due to stock draws, lower OPEC production and stronger Middle East demand, UBS analysts wrote.

China’s first public sale of state oil reserves capped crude price gains. PetroChina and Hengli Petrochemical bought four cargoes totaling about 4.43 million barrels, sources said.

Analysts also noted indebted China Evergrande remains a risk to oil prices after the company’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Ron Bousso in London and Aaron Sheldrick in Tokyo; Editing by Louise Heavens, Edmund Blair, Emelia Sithole-Matarise and David Gregorio)

Natural Gas Weekly Price Forecast – Natural Gas Markets Form a Hammer

Natural gas markets have fallen during the course of the week to test the 50% Fibonacci retracement level from the most recent move to the upside. On the other hand, we have turned around to show signs of life and therefore I think it is likely that we are going to continue to grind to the upside. The previous week has formed a massive shooting star, which of course contradicts what we have just done over the last week. That being said, the market continues to hover around the $5.00 level, an area that of course will attract a lot of attention.

NATGAS Video 27.09.21

At this point, longer-term traders will be paying close attention to both the shooting star and the hammer, because if we break either one of these candlesticks, it is likely that it will kick off a bigger move. If we break down below the bottom of the hammer, that opens up a move towards the $4.50 level, where we might see a little bit more in the realm of value hunting. On the other hand, if we were to turn around a break above the top of the hammer, then we will probably test the top of that shooting star. Breaking above there could then open up another massive move to the upside.

At this point, the market continues to see a lot of indecision, but I think longer term we continue the overall trend. If we were to drop down below the $4.50 level, then I think you have to look at the possibility of a collapse, which quite frankly after this type of parabolic move is something that is still possible.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Have Noisy Session

Natural gas markets have gapped a bit higher during the course of the trading session on Friday as we continue to see natural gas attract a lot of attention, but quite frankly this is a market that has been desperately needing the pullback that we have just seen. If we can break above the top of the candlestick for the session on Friday, then it is likely that we go looking towards even higher pricing further. We have gapped above the $5.00 level to show signs of life again.

NATGAS Video 27.09.21

To the downside, the area has obvious support near the $4.75 level, which is an area that has been massive support multiple times. That being said, if we were to break down below there it is likely that we could unwind to go looking towards the 50 day EMA. We have recently bounced from the 50% Fibonacci retracement level, which of course attracts a lot of attention in and of itself. Keep in mind that the market is likely to continue to see this as a market that will continue to play based upon the lack of supply coming out of the southeastern part of the United States and of course the massive amount of demand coming out of the EU.

All things been equal, this is a market that I think may retest the highs as we go into colder weather down the road. Furthermore, a lot of people are starting to wonder whether or not this is simply going to continue to reinflate right along with the other commodity markets.

For a look at all of today’s economic events, check out our economic calendar.

Piercing the Sky: Where Will We See the Black Gold by Xmas?

Fundamental Updates

The crude closed on highs on Thursday thanks to optimism about demand as well as the remaining tight supply. In fact, this increase is driven by a general market sentiment that is relatively favorable to the macroeconomic situation and the conviction that supply should remain tight until the end of 2021.

The WTI crude oil futures rose 1.5% – more than $1 compared to Wednesday’s close. Like Wall Street, the oil market has also been sensitive to more and more reassuring tone of messages from China about the situation of real estate developer Evergrande, which is on the verge of default. In addition, the acceleration of air travel caused by Washington lifting restrictions on entry into the United States could also boost demand for kerosene. And finally, while natural gas prices are hanging from the ceiling, we could see a shift in demand from gas to oil happening, which would obviously boost the barrel rally in Q4!

Geopolitical Scene

Thursday evening, Lebanese Hezbollah announced the arrival of a new shipment of oil from Iran to the Syrian port of Banians — the party’s television channel Al Mana reported on its Telegram account this morning. Hezbollah argues that the shipments are intended to help the Lebanese people, who are suffering severe fuel shortages due to the financial crisis the country has been experiencing for the last couple of years.

On the other hand, Lebanese Prime Minister Najib Mimait, expected at the Elysée Palace (Paris) on Friday, said that the shipments from Iran violated Lebanon’s sovereignty, as both Syria and Iran are subject to US sanctions.

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Figure 1 – WTI Crude Oil (CLX21) Futures (November contract, daily chart)

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Figure 2 – Henry Hub Natural Gas (NGV21) Futures (October contract, daily chart, logarithmic scale)

With the black gold now attempting to pierce through its all-time highs, it will be interesting to see how oil demand will progress at those levels, as well as whether OPEC+ will face some new pressures to intervene on the supply side in the forthcoming weeks.

And… what do you think? We would like to hear from you! What’s your opinion on how high the WTI Crude could go before the end of the year? Do not hesitate to let us know!

Have a nice weekend!

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Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Sebastien Bischeri
Oil & Gas Trading Strategist

* * * * *

The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

With Some Gas Stations Closed, Britain Vows to Solve Trucker Shortage

By Sarah Young, Victor Jack and Kate Holton

Just as the world’s fifth largest economy emerges from the COVID-19 pandemic, a spike in European wholesale natural gas prices and a post-Brexit shortage of truck drivers has closed some petrol stations and raised fears of a food supply crunch.

BP temporarily closed some of its 1,200 UK petrol stations due to a lack of both unleaded and diesel grades, which it blamed on driver shortages. ExxonMobil’s Esso said a small number of its 200 Tesco Alliance retail sites had also been impacted.

For months supermarkets and farmers have warned that a shortage of truck drivers was straining supply chains to breaking point – making it harder to get goods to market.

Transport Secretary Grant Shapps said there was a global shortage of truckers after COVID halted lorry driver testing so Britain was doubling the number of tests. Asked if the government would ease visa rules, he said the government would look at all options.

“We’ll do whatever it takes,” Shapps told Sky News. “We’ll move heaven and earth to do whatever we can to make sure that shortages are alleviated with HGV drivers.”

“We should see it smooth out fairly quickly,” Shapps said.

But hauliers and logistics companies cautioned that there were no quick fixes and that any change to testing or visas would likely be too late to alleviate the pre-Christmas shortages as retailers stockpile months ahead.

TRUCKER VISAS?

Such is the strain that McDonald’s had to take milkshakes and bottled drinks off the menu at its British restaurants in August and chicken chain Nando’s ran out of chicken as they battled the supply chain issues that have hit businesses across the economy.

Suppliers have warned that there could be more shortages of petrol because of a lack of drivers to transport fuel from refineries to retail outlets.

The trucking industry body, the Road Haulage Association, has called on the government to allow short-term visas for international drivers to enter Britain and fill the gap, while British drivers are being trained for the future.

“It’s an enormous challenge,” Rod McKenzie, head of policy at the RHA, told Reuters. In the short-term he said international drivers could help, even if it may be too late to help Christmas, and in the longer term the industry needed better pay and conditions to attract workers.

“It’s a tough job. We the British do not help truckers in the way that Europeans and Americans do by giving them decent facilities,” he said.

The British haulage industry says it currently needs around 100,000 more drivers after some 25,000 returned to Europe before Brexit and the pandemic halted the qualification process for new workers.

Shapps said COVID-19 exacerbated the problem and that Britain was unable to test 40,000 drivers during lockdowns.

“It’s a bit of a global problem so it’s not immediately obvious that opening up visas would actually resolve the problem but we’ll move heaven and earth on this,” he told Times Radio.

For a look at all of today’s economic events, check out our economic calendar.

(Editing by Guy Faulconbridge and Toby Chopra)

Silver Price Prediction – Prices Edge Higher on Soft PMI Data

Silver prices edged higher, forming in inside day, which is a sign of indecision. The selloff in the greenback did not help the silver prices gain traction. U.S. Yields moved lower in the wake of the Fed’s monetary policy decision on Wednesday and softer than expected Jobless claims were released by the Labor Department on Thursday.  PMI data released by IHS Markit showed a pullback in September in Manufacturing and Services.

[fx-broker slug=fxtm]

Technical analysis

Silver prices edged but formed an inside day. Prices are poised to test resistance near the 10-day moving average at $23.06. Target support is seen near the September lows at 22.03. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

The first look at national PMI data from IHS Markit was reported on Thursday. The September manufacturing PMI came in at 60.5, a 5-month low versus 55.1 reported in August. The services PMI also dropped, hitting a 14-month low at 54.44 versus 55.1 in August. The total September composite PMI was 54.5, which was a 1-year low versus 55.4 in August.

Natural Gas Price Prediction – Prices Surge on Inventory Build

Natural gas prices rallied sharply rising more than 3% following a smaller than expected build in natural gas inventories. Expectations had been for an 83 Bcf build in stockpiles according to survey provider Estimize. The weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. Tropical storm Sam has formed in the Atlantic but its unlikely to impact any natural gas infrastructure.

Technical Analysis

Natural gas prices surged rising 3.3% and poised to test resistance is seen near the 10-day moving average at 5.09. Support is seen near the 50-day moving average at 4.30. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Inventories Rise Less than Expected

Natural gas in storage was 3,082 Bcf as of Friday, September 17, 2021, according to the EIA. This represents a net increase of 76 Bcf from the previous week. Stocks were 589 Bcf less than last year at this time and 229 Bcf below the five-year average of 3,311 Bcf. At 3,082 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Markets Rally at 50% Fib

Natural gas markets have rallied a bit during the course of the trading session on Thursday as we approach the 50% Fibonacci retracement level. As things stand right now, the 50 day EMA is starting a resource the 61.8% Fibonacci retracement level as well, so I do think that it is only a matter of time before we see some type of recovery. After all, the market is very bullish, but had gotten way ahead of itself. Because of this, the market will more than likely continue to look for buying opportunities, as a parabolic market typically will find buyers given enough time on a pullback.

NATGAS Video 24.09.21

Value hunters are out there, and the fact that we are broken above the top of a very neutral candlestick from the previous session, it is possible that we could go higher. At this point, it is not until we break down below the 61.8% Fibonacci retracement level that I think the pullback is something to be crucial. We still have a lot of the supply constraints, and of course we have colder temperatures coming relatively soon in North America. With all of that being tied together, it does make sense that we stay somewhat elevated.

That being said, as soon as the supply chain gets somewhat normalized, I suspect that we will see the mother of all selloffs. We are nowhere near that right now, especially as the European Union is running short of natural gas currently. With this, I think it is a market that we will continue to see a “buy on the dips” type of attitude out there. This is a market that is almost impossible to short at this point.

For a look at all of today’s economic events, check out our economic calendar.

Oil Prices Rise on Tight Supply, Renewed Risk Appetite

The market was also supported by a return of appetite for risk assets as concerns eased over a potential default by property developer China Evergrande and its possible fallout on the world’s second-largest economy.

U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.2%, to $72.40 a barrel by 06:45 GMT, while Brent crude rose 18 cents, or 0.2%, to $76.37 a barrel.

Both contracts jumped 2.5% on Wednesday after data from the U.S. Energy Information Administration showed U.S. crude stocks fell by 3.5 million barrels to 414 million barrels in the week to Sept. 17 – the lowest total since October 2018 – in a bigger drawdown than analysts had expected. [EIA/S]

“With Gulf of Mexico production returning slowly, and natural gas prices remaining sky high, the structural outlook for oil remains promising as OPEC+ struggles to meet even its current production quotas,” said Jeffrey Halley, analyst at brokerage OANDA.

Several OPEC+ countries – including Nigeria, Angola and Kazakhstan – have struggled in recent months to raise output due to years of under-investment or maintenance work delayed by the COVID-19 pandemic.

In a sign of strong fuel demand as travel bans ease, East Coast refinery utilisation rates in the United States rose to 93%, the highest since May 2019, EIA data showed.

ANZ Research said market sentiment is also being supported by surging natural gas prices.

“Supply shortage of gas could encourage power utilities to shift from gas to oil if winter turns out to be colder this year,” ANZ analysts said in a note.

Natural gas prices have risen sharply around the globe in recent months. That has been due to a combination of factors, including increased demand particularly from Asia as it enters its post-pandemic recovery, low gas inventories, and tighter-than-usual gas supplies from Russia.

The rise in oil prices came even as the U.S. dollar held near a one-month high after the U.S. Federal Reserve signalled rate hikes could come next year, more quickly than expected.

Oil prices typically fall when the dollar rises as a stronger greenback makes oil more expensive for holders of other currencies.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Tom Hogue and Muralikumar Anantharaman)

Natural Gas Price Fundamental Daily Forecast – Hovering Above Target Zone at $4.867 – $4.649 Ahead of EIA Data

Natural gas futures are inching lower early Thursday well ahead of today’s government storage report that could determine the near-term direction of the market.

The market is also hovering above a key retracement zone at $4.867 to $4.649 for a third session. Trader reaction to a test of this area will tell us if the buyers are still in control, or if the short-sellers have recaptured the momentum unless there is an earlier than expected cold shot or until the winter heating season begins.

At 02:26 GMT, December natural gas futures are trading $4.947, down $0.022 or -0.44%.

The mostly sideways-to-lower price action this week has been primarily fueled by two factors. Helping to keep a lid on prices are forecasts calling for weak short-term demand due to mild weather conditions. Underpinning prices and perhaps preventing a sharp break are rebounding liquefied natural gas (LNG) export volumes.

Bespoke Weather Services added that Thursday’s U.S. Energy Information Administration (EIA) storage report” is the next major data point” that could drive futures in either direction the rest of this week.

LNG Feed Gas Levels Rise ~ NGI

Natural Gas Intelligence (NGI) reported that Freeport LNG in Texas largely resolved production issues after former Hurricane Nickolas knocked out power last week. This helped to drive up LNG feed gas levels to 10 Bcf on Wednesday from around 9 Bcf earlier in the week and not far from record levels reached over the summer amid robust demand from Europe and Asia.

Supplies of gas in Europe are precariously light, galvanizing calls for Lower 48 exports to rebuild stockpiles for winter. Demand from Asia is robust and its natural gas needs appear likely to swell further following a Chinese government announcement this week that it would stop building coal-fired plants abroad.

The announcement did not specify whether the policy shift would impact China’s domestic coal projects, but analysts said it would drive up gas demand in other Asian countries.

Early Look at Thursday’s EIA Weekly Storage Report

A consensus of experts predicts Thursday’s EIA storage report for the week-ending September 17 will show a build between the mid-70s to low 80s Bcf.

NGI reported that a Reuters survey ranged from injections of 58 Bcf to 82 Bcf, with a median build of 76 Bcf. Bespoke predicted a 75 Bcf increase. NGI’s model called for an 82 Bcf injection.

Last year, the EIA recorded a 70 Bcf injection for the similar week, while the five-year average injection is 74 Bcf.

Daily December Natural Gas

Daily Outlook

A bearish EIA report should drive prices into the technical retracement zone at $4.867 to $4.649. Trader reaction to this move will determine the near-term direction of the market.

Ahead of the report, the $4.867 to $4.649 retracement zone represents value. But that’s given the current fundamentals.

Traders betting on strong near-term weather demand as well as increased LNG exports will probably buy the break into this area. Those traders betting on lower demand until the start of the winter heating season will likely drive prices through the support at $4.649, in search of better value.

For a look at all of today’s economic events, check out our economic calendar.

Oil Prices Settle Up on U.S. Stocks Draw, Rising Fuel Demand

Despite recent wobbles from U.S. economic figures, overall demand for fuel has rebounded to pre-pandemic levels. Product supplied over the last four weeks has come in at nearly 21 million barrels per day, not far from 2019’s peak.

U.S. crude inventories last week fell by 3.5 million barrels to 414 million barrels, the lowest since October 2018, the U.S. Energy Information Administration said on Wednesday.

“Crude oil prices remain supported as demand recovers around the world and inventories continue to draw,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

U.S. West Texas Intermediate (WTI) crude futures rose $1.74, or 2.5%, to $72.23, while Brent crude futures settled up $1.83, or 2.5%, to $76.19 a barrel.

Oil facilities in the Gulf of Mexico continue to return to production, with weekly output rising 500,000 bpd in the most recent week to 10.6 million bpd, the EIA said. BP on Wednesday said all four of its offshore facilities in the region have resumed operations after Hurricane Ida, brought back online and producing as of Sept. 12.

Also supporting prices has been difficulties by OPEC members struggling to raise output. Rising prices in other markets like natural gas have also supported oil, with energy market shortages causing a supply crunch in Europe and Asia.

“Given the variety of supportive factors in the energy space, notably sky-high natural gas prices … dips in prices right now are likely to be short-lived,” said Jeffrey Halley, an analyst at brokerage OANDA.

Iraq’s oil minister said OPEC and its allies are working to keep crude prices close to $70 per barrel as the global economy recovers, state news agency INA reported on Wednesday.

The U.S. Federal Reserve, which began a two-day policy meeting on Tuesday, signaled interest rate increases may follow more quickly than expected. Tightening monetary policy could cut investor tolerance for riskier assets such as oil.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; editing by David Gregorio, Nick Zieminski and Sonya Hepinstall)

Natural Gas Price Prediction – Prices Gain Foothold Ahead of Inventory Report

Natural gas prices found a foothold on Wednesday ahead of Thursday’s inventory report after, falling for the 4-consecutive trading days. Expectations are for a 83 Bcf build in stockpiles according to suvey provider Estimize. This build follows last weeks larger than expected build in natural gas inventories. The weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. There are 4-storms in the Atlantic; the two named storms, Peter and Rose, are expected to stay well away from the continental United States. According to the most recent forecast from NOAA, the other storms have a less than 60% chance of becoming tropical cyclones during the next 48-hours.

Technical Analysis

On Wednesday, natural gas prices found support ahead of the 50-day moving average at 4.27. Resistance is seen near the 10-day moving average at 5.09. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Soaring Gas Prices Ripple Through Heavy Industry, Supply Chains

By Bozorgmehr Sharafedin, Susanna Twidale and Roslan Khasawneh

Some companies, including steel producers, fertiliser manufacturers and glass makers, have had to suspend or reduce production in Europe and Asia as a result of spiking energy prices. That includes two of the world’s largest fertiliser makers, which said they would cut production in Europe. The UK on Tuesday said it agreed to provide state support to one of the companies to restart production of by-product carbon dioxide, which is used in food production, to avert a supply crunch.

Natural gas prices have risen sharply around the globe in recent months. That has been due to a combination of factors: including increased demand particularly from Asia due to a post-pandemic recovery; low gas inventories; and tighter-than-usual gas supplies from Russia.

Gas prices in Europe have risen more than 250% this year, while Asia has seen about a 175% increase since late January. In the United States, prices have surged to multi-year highs and are about double where they were at the start of the year. Electricity prices have also risen sharply as many power plants are gas-fired.

Industrial Energy Consumers of America, a trade group representing chemical, food and materials manufacturers, has in recent days called on the U.S. Department of Energy to stop the country’s liquefied natural gas producers from exporting gas to help keep the energy costs down for industry.

Additional supplies of gas could alleviate pressure. Norway has allowed increased gas exports. More supply could flow from Russia by the end of the year with the country’s new Nord Stream 2 pipeline awaiting approval from Germany’s energy regulator. The pipeline project has drawn criticism from the United States, which says it will increase Europe’s reliance on Russian energy supplies.

PRODUCTION DISRUPTIONS

The pressures so far have been particularly acute in Europe, where gas stocks are much lower than usual heading into winter. Norway’s Yara International ASA, one of the world’s largest fertiliser makers, on Friday said it would cut about 40% of its European ammonia production due to high gas prices. That came after U.S.-based CF Industries Holdings Inc said gas prices were prompting it to halt operations at two of its British plants. Natural gas is the most important cost input for nitrogen-based chemicals and fertilizers.

Yara’s chief executive, Svein Tore Holsether, told Reuters in an interview Monday that the company was bringing ammonia to Europe from production facilities elsewhere, including the United States and Australia. “Instead of using European gas, we are essentially using gas from other parts of the world to make that product and bring it into Europe,” he said.CF Industries didn’t respond to requests for comment.

Some industries are calling on governments to intervene on their behalf. These pleas come as some countries have acted to protect consumers from soaring energy bills, such as Spain, which last week approved a package of measures including price caps.

Among those asking for help is the food industry following a shortage of carbon dioxide (CO2) caused by the suspension of production in some fertiliser plants. CO2 is used in the vacuum packing of food products to extend their shelf life, to stun animals before slaughter and to put the fizz in soft drinks and beer.

In the UK, meat processors had warned they will run out of CO2 within five days, forcing them to halt production. Soft drink manufacturers, who rely on the gas to make carbonated drinks, said supplies were running low.

On Tuesday, the British government said it struck a three-week deal with CF Industries for the American company to restart the production of carbon dioxide in the UK. Britain’s environment minister, who said the state support could run into tens of millions of pounds, also warned the food industry that carbon dioxide prices would rise sharply.

CF Industries said in a statement it is immediately restarting ammonia production at its Billingham plant following the agreement.

WEATHERING THE STORM

Other energy-intensive sectors such as steel and cement are also feeling the pinch.

Soaring gas prices have in the past couple of weeks “forced some steelmakers to suspend operations during those periods of the night and day when the cost of energy rockets,” said Gareth Stace, director general at industry group UK Steel. He declined to identify which companies.

British Steel, the country’s second-largest steel producer, said it was maintaining normal levels of production but that the “colossal” energy-price increases made “it impossible to profitably make steel at certain times of the day.”

Some manufacturers say they are able to cope, so far.

Germany’s Thyssenkrupp AG, Europe’s second-largest steelmaker, said hedging mechanisms it had in place against energy price increases, especially gas, meant it was not curbing production. But it said it was indirectly affected because the industrial gases it used are linked to electricity prices.

HeidelbergCement AG of Germany, the world’s second-largest cement maker, said higher energy prices were driving up production costs but that operations had not been halted as a result.

In China, several steel, ceramic and glass makers have reduced production to avoid losses, according to Li Ruipeng, a local supplier of liquefied natural gas in the northern province of Hebei. And, China’s southwestern province of Yunnan this month imposed limits on production of some heavy industries, including producers of fertilisers, cement, chemicals, and aluminium smelters due to energy shortages, a move that analysts said could reduce exports.

To weather the storm, some energy-intensive industries and utility firms in Asia and the Middle East have temporarily switched from gas to fuel oil, crude, naphtha or coal, analysts and traders said. That trend is expected to continue for the rest of the year and into the beginning of next, according to the International Energy Agency, the Paris-based energy watchdog.

In Europe, demand for coal as an alternative power source has also risen significantly. But options for switching to alternative sources of energy are limited in the region largely due to government policies aimed at encouraging the use of gas over more polluting fuels such as coal.

The glass industry was historically run on fuel oil, but almost all sites in the United Kingdom have now transitioned to natural gas, according to Paul Pearcy, federation coordinator at British Glass, a UK trade association. Only a few sites have fuel oil tanks that enable them to switch energy source if prices skyrocket, he added.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Bozorgmehr Sharafedin and Susanna Twidale in London, Roslan Khasawneh in Singapore; Additional reporting by Guy Faulconbridge, Nigel Hunt, Eric Onstad and Ahmad Ghaddar in London, Jessica Jaganathan and Chen Aizhu in Singapore, Yuka Obayashi in Tokyo, Nidhi Verma in Delhi, Scott DiSavino in New York, Heekyong Yang in Seoul, and Christoph Steitz in Frankfurt, Tom Kaeckenhoff in Düsseldorf, Polina Devitt in Moscow, Arathy S Nair in Houston; Editing by Cassell Bryan-Low)

Natural Gas Price Forecast – Natural Gas Give Up Early Gains Again

Natural gas markets have rallied initially during the trading session on Wednesday but gave back gains to show signs of exhaustion yet again. Quite frankly, natural gas got way ahead of itself, so it is likely that we will continue to see a lot of noisy behavior. At this point, it is a matter of finding support, because you certainly have to be cautious about shorting this market. We are still very much in an uptrend, and the fact that we are forming an inverted hammer tells me that we are more likely to go lower from here than higher. However, if we were to turn around and take out the candlestick for the trading session to the upside, that would be very bullish.

NATGAS Video 23.09.21

Natural gas has gotten a bit of a boost due to the idea of the heatwave, followed by the hurricane that hit southeastern part of the United States to disrupt refining, which of course shrink supply that was available for the market. After that, we then started to see the European Union struggle with supply coming out of Russia, so it has been a bit of a “perfect storm” for natural gas as of late.

That being said, the market has been very noisy and overdone, so this pullback I think eventually will offer value. I believe that most traders look at it through the same situation as well, so with that being the case, I think if you are looking for some type of turnaround in the charts or support of daily candlestick to get involved with and take advantage of.

For a look at all of today’s economic events, check out our economic calendar.

Oil Edges Up, as Investors Worry About Global Demand

Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and settled just up 44 cents at $74.36 a barrel, after falling by almost 2% on Monday.

The October West Texas Intermediate (WTI) contract, which expired on Tuesday, rose 27 cents to settle at $70.56 a barrel, after dropping 2.3% in the previous session. The more active November contract rose 35 cents a barrel to $70.49.

Brent and the November WTI contract earlier reached session highs of $75.18 a barrel and $71.48 per barrel, respectively.

“It seems to be a very nervous trade today,” said Phil Flynn, senior analyst at Price Futures group in Chicago. “It’s a little bit of ongoing concerns about the potential impact of demand going forward.”

The TASS news agency said Russia believes global oil demand may not recover to its 2019 peak before the pandemic, as the energy balance shifts.

However, the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected as part of the OPEC+ agreement – suggesting a supply gap could grow.

Investors across financial assets have been rocked by fallout from the China Evergrande crisis that has harmed asset values in risk markets like equities.

“Traders worried that it could trigger a domino effect in China’s major debt-driven companies, and a rollover bearish effect for stocks and commodity prices,” said Nishant Bhushan, oil markets analyst at Rystad Energy.

“However, given that all Chinese major banks and lending institutions are controlled by the government, there is a ray of hope in the market that the second biggest economy in the world would be able to absorb shock waves from the Evergrande.”

In addition, the U.S. Federal Reserve is expected to start tightening monetary policy, which could cut investor tolerance for riskier assets such as oil. Fed policymakers began a two-day meeting Tuesday.

U.S. oil production is still recovering from hurricanes that hit the Gulf Coast region. Royal Dutch Shell, the largest U.S. Gulf of Mexico oil producer, said on Monday that damage to offshore transfer facilities from Hurricane Ida will cut production into early next year.

About 18% of the U.S. Gulf’s oil and 27% of its natural gas production remained offline on Monday, more than three weeks after Ida.

Industry data later on Tuesday was expected to show U.S. crude and product inventories fell last week. Government data is due on Wednesday. [EIA/S] [API/S]

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio)

Commodity Markets Set for High Volatility, Says Louis Dreyfus

Prices of agricultural commodities have risen sharply, a trend contributing to increased first-half profits reported by LDC, but remain well below peaks seen a decade ago, Michael Gelchie said.

“Unlike in 2010-2011, we’re likely in store for a period of elevated volatility,” Gelchie told Reuters in a telephone interview.

Continued waves of COVID-19, shipping congestion and question marks over when the U.S. Federal Reserve will start tapering monetary support were all fuelling volatility, he said.

“We still haven’t necessarily seen a normalisation of the supply chain,” Gelchie said.

A broader surge in commodity and energy prices also reflected a shift towards a low-carbon economy, given that “the infrastructure to support that costs money,” he added.

LCD, one of the world’s larggest agricultural commodity merchants, earlier on Tuesday announced a sharp rise in first-half profit, supported by higher prices and strong demand for staple crops.

Gelchie declined to comment on the group’s prospects for the rest of the year, noting that prices remained high and crush margins for oilseeds strong.

The improved results further ease financial pressure on LDC after it completed this month the sale of a stake to Abu Dhabi holding firm ADQ, bringing in the first non-family shareholder in the agricultural commodity group’s 170-year history.

The deal with ADQ, which allowed LDC’s parent company to repay $1 billion borrowed from its operating group, would help LDC accelerate investments, Gelchie said, without giving details.

ADQ has secured four seats on an enlarged nine-member supervisory board headed by main shareholder Margarita Louis-Dreyfus.

The deal with LDC also involves a plan to supply food commodities to the United Arab Emirates.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Gus Trompiz; editing by Barbara Lewis)

Natural Gas Price Prediction – Prices Fall as Momentum Turns Negative

Natural gas prices continue to trend lower on Tuesday, falling for the 4th consecutive trading day. The technicals look negative as negative momentum is accelerating. The decline comes despite warmer than expected weather forecasts throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. There are 4-storms in the Atlantic; the two named storms, Peter and Rose, are expected to stay well away from the continental United States. According to the most recent forecast from NOAA, the other storms have a less than 60% chance of becoming tropical cyclones during the next 48-hours.

Technical Analysis

On Tuesday, natural gas prices dropped 3.8%% and is poised to test support seen near the 50-day moving average at 4.25. Resistance is seen near the 10-day moving average at 4.25. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. Medium-term positive has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Natural Gas Price Forecast – Natural Gas Markets Continue to Pull Back

Natural gas markets have initially tried to rally again during the trading session on Tuesday, but the $5.00 level has offered a significant amount of resistance. Because of this, the market looks as if it is going to continue going lower, perhaps towards the $4.50 level underneath. Quite frankly, the market has been overdone for quite some time, so it certainly makes quite a bit of sense that we would see a continued move lower. The market cannot go in one direction forever, so that is something that makes quite a bit of sense.

NATGAS Video 22.09.21

The market had been so parabolic that I have been saying for a while you simply cannot buy it. Obviously, it is difficult to short it, but it is worth noting that the $4.50 level will more than likely be backed up by the 50 day EMA, so it all comes together quite nicely in that general vicinity, assuming that it does in fact happen. On the other hand, if we turn around to take out the top of the inverted hammer from the Monday session, then it is obvious that we are going to go higher. Nonetheless, this is a market that still looks at a lack of supply as a major issue, and of course more importantly, the lack of refining capacity at the moment.

This might be a short-term phenomenon, but really at this point in time the trend is to the upside and that is the most important thing to pay attention to. Ultimately, I am either long or on the sidelines for this market currently.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $4.867 – $4.649 Will Set Near-Term Tone

Natural gas futures are inching lower shortly before the New York opening on Tuesday with prices moving ever so close to an important support area at $4.867 to $4.649. Trader reaction to this price zone should determine whether the market revisits the upper $5.00 area or the lower $4.00 area over the near-term. The main catalysts producing four consecutive lower-lows are forecasts calling for cooler temperatures and moderate demand.

At 11:31 GMT, December natural gas futures are trading $5.080, down $0.052 or -1.01%.

Short-Term Weather Outlook

According to NatGasWeather for September 21-27, “A weather system with showers and thunderstorms will exit the Northwest and track across the Midwest and into the Great Lakes/Ohio Valley the next few days with comfortable highs of upper 60s to lower 80s.

The nation’s strongest demand will be from California to Southern Texas as high pressure brings hot highs of 90s to near 100 degrees Fahrenheit, although cooler over Northern Texas and the South with highs of 80s.

National demand will drop to very light levels late this week into next weekend as highs of upper 60s to 80s rules most of the U.S. and with very little coverage of 90s. Overall, national demand will be low to very low into the foreseeable future.”

Thursday’s EIA Storage Report Expected to Come in Higher than Five-Year Average

Thursday’s U.S. Energy Information Administration storage report is expected to come in slightly above historical norms. NGI’s model is calling for an 82 Bcf injection into natural gas stocks for the week-ended September 17.

Last year, the EIA recorded a 70 Bcf injection for the similar week, and the five-year average injection is 74 Bcf.

Daily Forecast

Keep an eye on LNG exports and the soaring prices around the world. Bespoke Weather Services is reporting that a global supply crunch continues to put upward pressure on prices in Europe, the UK and Asia. The situation is so bleak that Goldman Sachs analysts predict that parts of Europe will be burning oil this winter to stay warm.

This could also influence markets in the United States because American exports of liquefied natural gas (LNG) are in high demand to fortify overseas stockpiles ahead of winter, when gas consumption peaks to heat homes and businesses.

U.S. firms are selling where they can generate the most profit, but that may not be the best thing to do with U.S. supplies at low levels. If the coming winter proves particularly cold, domestic supplies could run low and prices could shoot up once again beyond the $5.00 level.

For a look at all of today’s economic events, check out our economic calendar.