Natural Gas Price Forecast – Natural Gas Markets Showing Signs of a Top

Natural gas markets have gapped lower to kick off the trading session on Friday, before rallying to fill that gap. By doing so, we read into more resistance, and have since formed a bit of a shooting star. Because of this, I believe that the natural gas markets will show a bit of hesitation in this area, and therefore I think we could see a significant pullback. The $5.00 level could be interesting, as it is a large, round, psychologically significant figure, and perhaps even more importantly it is where the last major impulsive candlestick formed.

NATGAS Video 20.09.21

I have been saying for a while we need to see a little bit of a pullback in order to find value, extending between the $5.00 level and the $4.80 level support zone. If we were to break down below there, then the market is likely to go looking towards the $4.50 level. The 50 day EMA is sitting just below the $4.30 level as well, and it is starting to reach higher. All things been equal, this is a market that has gotten far ahead of itself, and therefore a pullback is necessary in order to find a bit of value. The markets cannot go straight up in the air forever, and therefore I think this is long overdue.

The market continues to see a lot of demand in general, especially as Europe itself is struggling with the supply. That being said, the market is likely to pull back mainly due to the fact we are starting to see headlines coming out of the EU that factories are closing down due to a lack of power. It is normally at these times you have seen the market get completely out of whack.

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

Stocks Remain Under Pressure Ahead Of The Weekend

Stocks Set To Open Lower

S&P 500 futures are losing ground in premarket trading as traders remain cautious ahead of Fed Interest Rate Decision which will be released on September 22.

Yesterday, Retail Sales and Continuing Jobless Claims reports exceeded analyst expectations and raised worries that Fed will soon announce the reduction of its asset purchase program.

Today, traders will have a chance to take a look at Michigan Consumer Sentiment report for September. Analysts expect that Consumer Sentiment increased from 70.3 in August to 72 in September.

Gold Tries To Rebound After Yesterday’s Sell-Off

Gold failed to settle below the support level at $1750 and is trying to rebound while the U.S. dollar is losing some ground against a broad basket of currencies.

Yesterday, gold gained strong downside momentum after it managed to get below the support at $1775. Not surprisingly, gold mining stocks found themselves under strong pressure and moved closer to yearly lows.

It remains to be seen whether traders will be ready to buy gold mining stocks today as the current rebound in the gold market is not strong, and gold may lose momentum in case U.S. dollar gains some ground or Treasury yields move closer to recent highs.

WTI Oil Failed To Settle Below The $72 Level

WTI oil has recently made another attempt to settle below the $72 level but failed to develop sufficient downside momentum. Oil found itself under pressure after the recent rally, but it looks that many traders were ready to buy oil on pullback.

The number of new daily coronavirus cases in the world is trending down which is bullish for oil. In addition, U.S. domestic oil production has not fully recovered from hurricane-related damage. Recent spikes in natural gas prices in Europe have also boosted traders’ enthusiasm. In this environment, WTI oil has good chances to get back to recent highs.

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

Natural Gas Price Fundamental Daily Forecast – Normal Correction Could Drive Prices Back to $4.867 – $4.649

Natural gas futures are inching lower on Friday following a weak trade the previous session. The price action suggests the market may be getting ready to roll over to the downside amid profit-taking following the negative impact of Hurricane Ida over two weeks ago and the avoidance of any major damage from Hurricane Nicholas earlier in the week.

At 09:36 GMT, December natural gas futures are trading $5.455, down $0.037 or -0.67%.

While we don’t expect to see a change in trend, we do think there is room for a normal 50% to 61.8% correction of the recent rally. This target zone is $4.867 to $4.749. Our work suggests this area represents value that could be attractive to new buyers.

Besides the easing of hurricane-related production worries, traders were also encouraged to book profits after the government’s weekly storage report showed a larger than expected injection and after new weather forecasts shifted to cooler, easing heat-related demand.

US Energy Information Administration Weekly Storage Report

Natural gas futures tumbled on Thursday after the EIA reported that domestic supplies of natural gas rose by 83 billion cubic feet (Bcf) for the week ended September 10. Ahead of the report, a consensus of estimates called for a build of 76 Bcf.

Energy Aspects estimated a 74 Bcf build and said this week’s report could launch a “string of more robust shoulder-season injections.”

According to Natural Gas Intelligence (NGI), a Wall Street Journal survey landed an average build estimate of 74 Bcf, with a range of 59 Bcf to 80 Bcf. A Reuters poll found injection estimates spanning from 59 Bcf to 85 Bcf, with a median of 77 Bcf. NGI estimated a 72 Bcf increase.

The five year average for this time of year is an increase of 79 Bcf. For the comparable week a year earlier, the EIA reported a build of 86 Bcf.

According to the EIA, total stocks now stand at 3.006 trillion cubic feet (Tcf), down 595 Bcf from a year ago and 231 Bcf below the five-year average.

Short-Term Weather Outlook

According to NatGasWeather for September 17-23, “The Midwest and Northeast will be comfortable with highs of 70s to 80s as weak cool fronts track through with showers. California to West Texas remains hot with highs of upper 80s to 100s as high pressure rules.

The East will be warm to very warm with highs of 80s to near 90 besides 70s in New England. The Northwest into Northern California will cool into the 60s and 70s the next few days as a wet Pacific system brings heavy rains, especially to the Northwest Coast.

Most of the U.S. will be comfortable next week with highs of 70-80s besides hotter 90s Southwest deserts. Overall, national demand will be moderate to low.”

Daily Outlook

Over the short-run, we expect a normal pullback as speculators book profits as problems caused by the pair of hurricanes continue to ease. We could also see a series of storage builds that could cap gains, but not necessarily lead to a change in trend.

Nonetheless, the United States is on track to fall short of 3.5 Tcf of gas in storage when injection season typically ends on October 31. That compares with more than 3.9 Tcf in 2020. This could lead to even higher prices in late 2021 and early 2022 if the coming winter produces harsh conditions.

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

Natural Gas Price Forecast – Has Natural Gas Finally Discovered Gravity?

Natural gas markets initially rallied a bit during the course of the trading session on Thursday, but as you can see has ran into resistance above the $5.50 region again. This is a market that has been extraordinarily bullish, and needless to say parabolic. The parabolic move that we have seen suggests that we eventually need to pullback and discover buyers. When a market rallies the way this one has, you eventually have to ask who is left to continue buying contracts?

NATGAS Video 17.09.21

There are a lot of concerns when it comes to the refining capacity in the southeastern part of the United States right now, especially as the Europeans are desperately short on natural gas. There are games being played by the Russians, and then of course we previously had a massive heat wave. All of that has made this market a bit too tight, thereby driving up the price.

That being said, the market is likely to continue to see pullbacks that get bought into, because quite frankly we just need to find “value.” The $5.00 level is an area that a lot of people would be paying close attention to, as it is a large, round, psychologically significant figure, and will attract a lot of attention. If we were to break down below there, then the market goes looking towards the $4.50 level underneath. If we break down below there, then we could go looking towards the $4.00 level underneath that comes into the picture. The 50 day EMA is currently at the $4.25 level, and therefore I think it is also an area that could attract attention. I would not be a seller, but I would pick up a bit of value as it appears.

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

Natural Gas Price Fundamental Daily Forecast – Traders Booking Profits Ahead of EIA Report

Natural gas futures are trading lower on Thursday shortly before the release of the government’s weekly storage report at 14:30 GMT. The selling pressure was strong enough to take out the previous day’s low at $5.408, making $5.790 a new minor top.

Although the price action suggests intraday weakness, both the main and minor trends remain intact. This tends to indicate that the selling is being fueled by profit-taking and position-squaring ahead of the storage report.

At 12:28 GMT, December natural gas futures are trading $5.406, down $0.198 or -3.53%.

US Energy Information Administration Weekly Storage Report

Today’s EIA report for the week-ending September 10 is expected to show a build of 76 Billion Cubic Feet (Bcf) according to a consensus of estimates.

Energy Aspects estimated a 74 Bcf build and said this week’s report could launch a “string of more robust shoulder-season injections.”

According to Natural Gas Intelligence (NGI), a Wall Street Journal survey landed an average build estimate of 74 Bcf, with a range of 59 Bcf to 80 Bcf. A Reuters poll found injection estimates spanning from 59 Bcf to 85 Bcf, with a median of 77 Bcf. NGI estimated a 72 Bcf increase.

The five year average for this time of year is an increase of 79 Bcf. For the comparable week a year earlier, the EIA reported a build of 86 Bcf.

The EIA last week said utilities injected 52 Bcf into storage for the period ended September 3. The build put inventories at 2,923 Bcf, far lower than the year-earlier level of 3,515 Bcf.

Europe Facing Steep Winter Energy Bills

Households across Europe face much higher winter energy bills due to a global surge in wholesale power and gas prices and consumer groups have warned the most vulnerable in the region could be hit by fuel poverty as a result, Reuters reported.

Prices have sky-rocketed due to low gas storage stocks, high European Union carbon prices, low liquefied natural gas tanker deliveries due to higher demand from Asia, less gas supplies from Russian than usual, low renewable output and gas and nuclear maintenance outages.

Benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January, while benchmark German and French power contracts have both doubled.

Europe’s winter heating season typically begins in October and wholesale prices are not forecast to fall significantly during the remainder of this year.

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

Japan’s Mitsui and Partners to Exit Mexico’s Gas Power Project

The divestiture from Falcon, which runs 2.23 gigawatts (GW) of gas-fired plants, comes amid a growing global trend away from fossil fuels in the race to cut harmful carbon dioxide emissions and slow climate change.

Trading house Mitsui, which has a stake of 40% in MT Falcon, said the deal followed a review of its asset portfolio. It plans to book a loss of 7.8 billion yen ($71 million) from the sale in the current financial year ending March 31, it added.

City gas provider Tokyo Gas, which holds a stake of 30% in the project, and Japan’s biggest power generator JERA, the owner of a 20% stake, said their decisions were also part of portfolio reviews, but declined to comment on financial impact.

Tohoku Electric Power, which has a stake of 10% in the project, confirmed the plan, but did not comment on the reason or its financial impact.

Mitsui and JERA decided this year to sell their stakes in Indonesia’s PT Paiton Energy, which runs coal power plants.

JERA is a joint venture of Tokyo Electric Power Company Holdings Inc and Chubu Electric Power Co Inc.

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

($1=109.2800 yen)

(Reporting by Yuka Obayashi; Editing by Clarence Fernandez)

Marketmind: When the Dragon Sneezes, Europe Catches a Cold

A look at the day ahead from Danilo Masoni.

The STOXX 600 index has fallen 1% so far in September, twice as much world stocks, and while Europe broadly is still in favour with investors and research analysts, the index has slipped all the way down to July lows.

Wall Street’s strength overnight could trigger a relief bounce this morning, but the China woes are far from over.

The worsening crisis at China’s No. 2 property developer Evergrande has sent its shares to decade lows, pushed Asian stock markets to their fourth day of losses. Trading in Evergrande bonds has been suspended. And virus outbreaks are clouding travel plans during next week’s Mid-Autumn Festival.

Europe Inc faces internal woes too. Soaring power prices have prompted Spain to cap energy bills and Italy said on Thursday it plans “short-term measures” to offset the price rises. Worries are other governments could resort to similar measures — at the expense of utility firms.

There’s some market support from signs U.S. inflation has peaked and the world’s biggest economy is in robust shape. Retail sales will be eyed later on for more clues on the health of the world’s largest economy.

Key developments that should provide more direction to markets on Thursday:

Japan’s hot exports growth cools as COVID-19 hits supply chains

Philip Morris seals deal to buy UK’s Vectura with 75% stake tendered; French utility Veolia launches 2.5 bln euro capital increase[nL1N2QI0D1; Vivendi paves way for Lagardere takeover

German car registrations Aug

ECB Speakers: Christine Lagarde

Norges Bank Governor Oystein Olsen speaks

Egypt central bank meeting

U.S. weekly jobless claims/Philly Fed September

U.S. Retail sales/business inventories

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

(Reporting by Danilo Masoni; editing by Sujata Rao)

 

Italy Working on Measures to Curb Power Prices – Minister

“About 80% of the rise comes from gas,” the minister told Rai Radio 1, indicating the short-term measures could be worth some 3 billion euros ($3.5 billion).

On Monday Cingolani said retail power prices in Italy were set to rise by 40% in the next quarter, driven by higher international gas prices and carbon permit costs.

Governments across Europe are coming under pressure to curb energy bills to help families and small businesses as economies slowly emerge from the coronavirus pandemic.

Asked about recent measures taken by Spain to reduce power prices and if Italy could follow suit, Cingolani said the two countries were very different.

“It is not easy to translate strategies from one country to another,” he said.

On Tuesday Spain passed emergency measures to reduce sky-high energy bills by redirecting billions of euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

Those measures include plans to limit the profits that hydropower and other renewable power generators can make from surging electricity prices.

The news sent shares in Spanish utilities into a tailspin and also triggered a sharp fall in shares in Italy’s biggest utility Enel, which controls Spain’s Endesa, on fears Rome could take similar drastic measures.

Enel shares recovered somewhat in early Thursday trade, up 1.4% at 07:25 GMT.

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

($1 = 0.8482 euros)

(Reporting by Stephen Jewkes and Francesca Piscioneri, editing by Giulia Segreti and Emelia Sithole-Matarise)

Natural Gas Price Prediction – Prices Rally on Storm Activity

Natural gas prices continued to rally on Wednesday as Tropical Storm Nicholas hit Texas. A second storm is entering the Caribbean that has 30% chance of forming a tropical cyclone in the next 48-hours. There is a third storm in the Atlantic that has recently come off the coast of Africa, which has a 70% chance of becoming a tropical cyclone. According to a report from the National Oceanic Atmospheric Administration, the weather is expected to remain much warmer than normal for the next two weeks.

Technical Analysis

Natural gas prices rallied further on Tuesday early following Monday’s 5.7% rally.  Support is seen near the 10-day moving average at 4.83. Resistance is seen near the 2014 highs at 6.5. Prices are overbought as the fast stochastic prints a reading of 98 and the RSI prints a reading of 83, both above their respective overbought trigger levels. Medium-term momentum is positive as the MACD histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

Demand Declines

U.S. natural gas demand falls week over week on reduced demand for power generation. According to the EIA, total U.S. consumption of natural gas fell by 9.4% compared with the previous report week. The decline in natural gas consumed for power generation, which fell by more than 6.0 Bcf per day week over week, accounted for almost all of the total decrease in domestic consumption.

Natural Gas Price Forecast – Natural Gas Markets Continue Parabolic Move

Natural gas markets have gone significantly higher during the trading session on Wednesday to reach above the $5.50 level, which extends yet even further the massive amount of bullish pressure that we have seen due to a lack of natural gas, especially in the European Union. As there is a serious lack of natural gas for use, it makes quite a bit of sense that we would see a lot of upward pressure. Furthermore, we have recently seen a lot of disruption when it comes to supply, mainly in the southeastern part of the United States as hurricane Ida caused quite a bit of devastation. Previously, we had seen a heat wave in the United States push demand higher as well, so it has been a bit of a “perfect storm.”

NATGAS Video 16.09.21

As economies around the world reopening, the idea of course is significant when it comes to the idea of demand, but at this point I think we are getting a bit overdone. Having said that, I have also thought that for the last couple of weeks. In other words, we are overdue for a significant pullback, so I would be cautious about getting long here. The $5.00 level underneath would be significant support as it is a large, round, psychologically significant figure, and therefore I think it is probably an area that you would see a lot of interest at the market price. Breaking down below the $4.80 level could signal an even sharper pullback, but ultimately this is a market that still looks very bullish, but you simply cannot “chase the trade” up at this level.

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

Natural Gas Price Fundamental Daily Forecast – Supported by Specs Betting on Less Adquate Storage Levels

Natural gas futures are trading sharply higher for a third straight session this week as supply worries continue to drive strong demand in anticipation of inadequate inventory levels as we get closer to the start of the winter heating season.

At 13:46 GMT, December natural gas futures are trading $5.620, up $0.222 or +4.11%.

Bespoke Weather Sees Significant Running Room for Liquefied Natural Gas

Bespoke Weather Services is pointing out strong gains in Henry Hub futures which coincide with rallying prices overseas and storage adequacy concerns both at home and abroad, Natural Gas Intelligence reported.

“Natural gas prices are (surprise, surprise) up sharply this morning seemingly piggybacking off European prices, which have been up more than 10% so far today,” Bespoke told clients in a note early Wednesday. “…It is all fear in the market, owning to storage levels that are viewed as less than sufficient in the event of a cold winter, not just here in the U.S., but even more so over in Europe.

“It makes it very difficult to say when this rally could end, or how high we can go, as we have tons more upside potential if the market begins to worry more about the possibility of having to price out LNG this winter.”

Wood Mackenzie Sees Some Tropical Storm Nicholas Impact on LNG Export Operations

Natural Gas Intelligence reported that according to Wood Mackenzie, Tropical Storm Nicholas appears to have had at least some impact on LNG export operations. On Tuesday, the firm notified clients when it observed evidence that all three trains at the Freeport LNG facility had turned off.

“Power outages are the most likely culprit,” Wood Mackenzie analyst Kara Ozgen said, noting that the local power outage rate near the Freeport terminal “reached 75% yesterday morning. Also supporting this idea was Centerpoint Energy’s outage map, which showed that there were power outages in the same area where Freeport LNG is situated.”

Short-Term Outlook

Thursday’s Energy Information Administration (EIA) weekly storage report “will begin the string of more robust shoulder season injections,” Energy Aspects said in a note to clients. However, this is not likely to stop the rally because speculators are focused on an even longer-term picture that carries into at least the start of the winter heating system.

Ahead of the EIA report, Energy Aspects are estimating a 74 Bcf build for the week-ended September 10.

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

Oil Settles Unchanged as Latest Storm Spares U.S. Energy Sector

Brent crude settled up 9 cents to $73.60 a barrel after hitting a session high of $74.28. U.S. West Texas Intermediate (WTI) crude settled up 1 cent, at $70.46, after touching a high of $71.22.

More than 39% of the U.S. Gulf of Mexico’s production of crude and natural gas remained shut on Tuesday, the regulator Bureau of Safety and Environmental Enforcement (BSEE) said. Nicholas made landfall in Texas on Monday and was to reach Louisiana on Wednesday, bringing more floods and heavy rains to the Gulf’s oil facilities.

“The Gulf situation is not resolving itself quickly,” said John Kilduff, partner at Again Capital LLC in New York.

Royal Dutch Shell shut production at an offshore oil platform due to heavy winds. Vessel traffic at some energy hubs was halted due to difficult weather conditions.

“There’s going to be import-export issues because Houston is in a semi-flood zone,” said Bob Yawger, director of energy futures at Mizuho.

Nicholas is the second major storm to threaten the U.S. Gulf region in recent weeks, bringing heavy rains to the Deep South and causing power outages. Still, most Texas refineries were operating normally and Texas utilities were restoring power to customers who suffered outages.

The Colonial pipeline, the largest U.S. fuel pipeline, partially resumed operations after shutting due to a power outage early in the day.

Oil turned negative during the session after new data from the U.S. Labor Department showed inflation cooling and as worries receded about the storm’s impact on the energy sector.

After three months of declining global oil demand, rollouts of COVID-19 vaccines should rekindle appetite for oil that was suppressed by pandemic restrictions, especially in Asia, the International Energy Agency (IEA) said on Tuesday.

The IEA sees a demand rebound of 1.6 million barrels per day (bpd) in October and continued growth until the end of the year.

Overall, the agency lowered its 2021 global oil demand growth forecast by 105,000 bpd to 5.2 million bpd but raised its 2022 figure by 85,000 bpd to 3.2 million bpd.

These forecasts are below those of the Organization of the Petroleum Exporting Countries (OPEC), which expects demand to grow by about 5.96 million bpd this year and 4.15 million bpd next year.

Protesters blocked an oil tanker from loading at the Libyan terminal of Es Sider on Tuesday, the National Oil Corp’s (NOC) media office and an engineer at the port said.

Details on China’s plans to sell crude from strategic reserves pressured prices. China’s state reserves administration said it would auction about 7.4 million barrels of crude on Sept. 24.

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

(Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo; Editing by Paul Simao, Mark Potter and David Gregorio)

 

Chevron Triples Low-Carbon Investment, but Avoids 2050 Net-Zero Goals

Oil producers globally are under mounting pressure from investors and governments to join the fight against climate change and sharply cut greenhouse gas emissions by mid-century, with U.S. majors lagging efforts by European companies.

Chevron said half of its spending will go to curb emissions from fossil fuel projects. A total of $3 billion will be applied for carbon capture and offsets, $2 billion for greenhouse gas reductions, $3 billion for renewable fuels and $2 billion for hydrogen energy.

Chevron is not ready to commit to net-zero targets. Chief Executive Michael Wirth told investors on Tuesday that the company does not want to “be in a position in which we lay out ambitions that we don’t believe are realistic and deliverable.”

Just a minority of its shareholders currently support a strategy used by European oil companies to invest in less-profitable solar and wind power, he added.

“The board is looking to see, how do you deliver a strategy that meets the needs of shareholders today and the expectations of shareholders for the future?” the CEO said. Directors may re-address a net-zero goal later this year with the company’s climate report, Wirth said.

European oil producers have set plans to shift away from fossil fuels with larger investments in renewables and 2050 emission targets. U.S. oil producers Chevron, Exxon Mobil Corp and Occidental Petroleum sought to reduce carbon emissions per unit of output while backing carbon capture and storage, and doubling down on oil.

BP Plc has said it will invest $3 billion-4 billion a year in low-carbon projects by 2025 and shrink oil and gas production by 40% in the next decade. Royal Dutch Shell Plc in February set annual investments of $2 billion-3 billion in clean energy.

Chevron maintained its goal of paring greenhouse gas intensity by 35% through 2028 compared to 2016 levels from its oil and gas output.

It said it would expand renewable natural gas production to 40 billion British thermal units (BTUs) per day and increase renewable fuels production capacity to 100,000 barrels a day to meet customer demand for renewable diesel and sustainable aviation fuel.

“We expect to grow our dividend, buy back shares and invest in lower-carbon businesses,” Wirth said.

Chevron aims to increase hydrogen production to 150,000 tonnes a year to supply industrial, power and heavy duty transport customers and raise carbon capture and offsets to 25 million tonnes a year by co-developing regional hubs.

Environmentalists said Chevron’s focus is on offsetting emissions from oil and gas output, not reducing oil output.

“Chevron’s new announcement does not represent a particularly large strategic shift,” said Axel Dalman, an associate analyst with climate change researcher Carbon Tracker. “The main item is that they plan to spend more on ‘lower-carbon’ business lines.”

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

(Reporting by Sabrina Valle in Houston, Arunima Kumar in Bengaluru; additional reporting by Laura Sanicola in New York; Editing by Arun Koyyur, Will Dunham, David Gregorio and Mark Porter)

Natural Gas Price Forecast – Natural Gas Markets Continue Parabolic Run

Natural gas markets have rallied again during the trading session on Tuesday as we continue this massive parabolic run. That being said, it is difficult to chase a train like this, because quite frankly this has been over the top. Now that we are well above the $5.25 level, where we go next as far as the upside is concerned it is more or less a gas, with $5.50 being the most likely of candidates.

NATGAS Video 15.09.21

That being said, we have gone so parabolic that sooner or later we are going to get a nasty selloff that could be very dangerous for your account. Unless you are already long at this point, it is going to be difficult to get involved. If you are already long of this market, then you have to look at the area just below the $5.00 level as potential massive support. If we were to break down below the $4.85 level, then I think we probably have something more nefarious at hand. Nonetheless, buying on the dips is about the only thing you can do if you want to be involved. I certainly would not be a seller of this market, because we continue to see one reason after another for the market to go higher.

The most recent reason for natural gas prices going higher has been the tropical storm in the Gulf of Mexico which could shut down refining capacity temporarily in a market that is already struggling for some type of normalcy. The market will continue to see a lot of bullish pressure in the short term, but when this ends, it could be rather negative. At this point though, we are showing no signs of that.

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

Natural Gas Price Fundamental Daily Forecast – There is Downside Risk if Hurricane Misses Key Production Areas

Natural gas futures continue to soar on Tuesday as traders bet new Hurricane Nicholas will do further damage to Gulf of Mexico production facilities which could hamper supply/demand balances at a time when gas storage for winter heating is at extremely low levels.

At 12:46 GMT, December natural gas futures are trading $5.475, up $0.109 or +2.03%.

Hurricane Nicholas formed late Monday in a region still reeling from the damage from Hurricane Ida. According to the government, more than one-half of the natural gas produced in the Gulf of Mexico pre-Ida remained offline Monday. Ida mad landfall in Louisiana on August 29.

The potential for flooding to force more production offline is bringing in the speculative buyers.

Liquefied Natural Gas Exports Threatened

Hurricane Nicholas also could threaten liquefied natural gas (LNG) exports out of Corpus Christi early this week, analysts at EBW Analytics Group said Monday. However, LNG demand is strong and exports were expected to bounce back quickly, barring massive damage. LNG feed gas volumes hovered around 11 Bcf the past week, near record levels, as demand from both Europe and Asia is consistently elevated amid supply shortages on both continents.

“LNG feed gas demand flows are showing a four-month high,” the EBW team said early Monday.

Early Look at This Week’s US Energy Information Administration Weekly Storage Report

Total stocks now stand at 2.923 trillion cubic feet (TCF), down 592 Bcf from a year ago and 235 Bcf below the five-year average, the government said.

For the EIA’s next print, scheduled for release Thursday, analysts are looking for a larger build. NGI estimated a 72 Bcf increase for the week ended September 10. Bespoke preliminarily estimated an injection of 79 Bcf.

The five-year average for this time of year is an increase of 79 Bcf, and for the comparable week a year earlier, EIA reported a build of 86 Bcf.

Daily Forecast

Hurricane Nicholas will track along the Texas Coast and parts of Louisiana still trying to recover from Hurricane Ida the next several days with heavy rains, strong winds, and cooling.

The storm could impact Liquefied Natural Gas (LNG) feed gas, produce power outages, as well as decrease production along the U.S. Gulf Coast due to flooding rains.

Impacts from the storm will be closely watched, especially since production in the Gulf of Mexico has been slow to recover from Hurricane Ida that tracked through nearly two weeks ago, and where it remains down 1.2 Bcf still today.

“Our storage situation remains precarious enough so that there is risk we would need to price out LNG in the event of a big cold winter, which of course would mean much, much higher prices, even from these levels,” Bespoke said. “With such a bullish backdrop, it is difficult to see what takes us lower, barring a huge gain in production, more than just getting the Gulf back online.”

Keep in mind that if Hurricane Nicholas misses key production facilities, natural gas futures could sell-off hard, back to perhaps last Friday’s close. In other words, it will erase all of this week’s gains so far.

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

Natural Gas Price Prediction – Prices Blast Off as Nicholas Heads to Texas

Natural gas prices surged higher on Monday as Tropical Storm Nicholas which is brewing in the Gulf of Mexico is poised to hit Texas. There is a second storm that is entering the Caribbean that has 10% change of forming a tropical cyclone in the next 48-hours. The weather is expected to remain much warmer than normal for the next two weeks, according to a report from the National Oceanic Atmospheric Administration. Production declined in the latest week.

Technical Analysis

Natural gas prices surged on Monday and was up 5.7%. Support is seen near the 10-day moving average at 4.78. Resistance is seen near the 2014 highs at 6.5. Prices are overbought as the fast stochastic prints a reading of 95 and the RSI prints a reading of 79, both above their respective overbought trigger levels. Medium-term momentum is positive as the MACD histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

Supply Fell in the Latest Week

Supply of natural gas falls this report week, led by production declines in Texas. According to data from the EIA, the average total supply of natural gas fell by 1.1% compared with the previous report week. Dry natural gas production decreased by more than 0.5 Bcf per day, or 0.6% compared with the previous report week, led by declines in North Texas production, which declined on average 0.3 Bcf per day week over week. Average net imports from Canada decreased by 11.0% from last week, as flows from Eastern Canada to the Midwest reversed course.

Natural Gas Price Fundamental Daily Forecast – Bullish Speculators Betting on Storm to Impact Production

Natural gas futures are trading higher early Monday, putting it within striking distance of last week’s high at $5.184. The market is being underpinned by worries over low production caused by the impact of Hurricane Ida and concerns over the possibility of inadequate storage levels ahead of the start of the winter heating season.

At 11:23 GMT, December natural gas futures are trading $5.158, up $0.91 or +1.80%.

Worries over a new storm brewing in the Gulf of Mexico could also be giving the market a boost. NatGasWeather noted Friday that “a new tropical disturbance will attempt to strengthen” in the far western Gulf of Mexico and then track toward the South Texas/Mexico border by Tuesday, “with heavy showers.” The system could force further delays in Gulf of Mexico production, the firm said.

Short-Term Weather Outlook

According to NatGasWeather for September 13-19, “The northern ½ of the U.S. will be comfortable with highs of 70s to 80s as weak cool fronts track through with showers. The southern ½ of the U.S. will be very warm to hot as high pressure rules with highs of upper 80s and 90s, including locally 100s in California and the Southwest.

Temperatures will cool across the Texas Coast as heavy rains and strong winds arrive as Tropical Storm Nicholas moves inland off the Gulf of Mexico on Tuesday – Friday.

Overall, national demand will be low across the northern U.S. but moderate to high across the southern U.S.

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic supplies of natural gas edged up by 52 billion cubic feet (Bcf) for the week ended September 3. That was much higher than most estimates. The five-year average increase was 65 Bcf.

Major surveys pointed toward a below-average build in the mid-20s Bcf. Injection estimates in a Bloomberg poll landed at a median of 39 Bcf. Predictions ranged from 32 Bcf to 58 Bcf. Results of a Reuters survey, meanwhile, ranged from injections of 32 Bcf to 51 Bcf, with a median build of 40 Bcf. Natural Gas Intelligence (NGI) estimated a 38 Bcf injection.

Total stocks now stand at 2.923 trillion cubic feet (TCF), down 592 Bcf from a year ago and 235 Bcf below the five-year average, the government said.

Daily Forecast

Lost production from Hurricane Ida combined with cooling-related demand has limited the U.S. ability to build up natural gas inventories. This should help sustain the current upside bias as we approach the winter heating season. Prices could get a further boost on Monday if Tropical Storm Nicholas heads toward production and refining facilities.

According to NatGasWeather, “Tropical Storm Nicholas will track along the Texas Coast the next several days with heavy rains, strong winds, and cooling.

The storm is expected to remain just below hurricane strength, but could impact Liquefied Natural Gas (LNG) feed gas, produce power outages, as well as decrease production along the U.S. Gulf Coast due to flooding rains.

Impacts from the storm will be closely watched, especially since production in the Gulf of Mexico has been slow to recover from Hurricane Ida that tracked through nearly two weeks ago, and where it remains down 1.2 Bcf still today.”

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

Natural Gas Price Fundamental Daily Forecast – Weaker on Profit-Taking; Underpinned by Low Supply Concerns

Natural gas futures started slightly better on Friday but prices drifted lower throughout the session, leading to a technical closing price reversal top. There weren’t any major changes to the fundamentals so most traders chalked up the loss to profit-taking, following a nearly 50 cent rise over Wednesday and Thursday.

On Friday, December natural gas futures settled at $5.067, down $0.091 or -1.76%. This was down from an intraday high of $5.184.

Despite the small setback, the bullish tone remains fully entrenched with weak production due to the hurricane-related shut ins and lingering concerns over the tight storage balances ahead of the start of the winter heating season.

Production Update

According to the Bureau of Safety and Environmental Enforcement (BSEE), as of Friday, nearly three-quarters of the natural gas produced in the Gulf of Mexico, 1.68 Bcf/d, remained offline.

Based on data as of midday on Friday, 65 oil and gas production platforms still were unmanned, which was more than 11%, BSEE said. Personnel also had not been returned to three moored rigs, or 28% working in the offshore. In addition, two unmoored rigs, or 13%, remained off location from where they were positioned before the hurricane, Natural Gas Intelligence (NGI) reported.

NGI went on to say that output was already modest ahead of Ida, with production averaging about 92 Bcf/d over the summer months – below the levels prior to the coronavirus pandemic and roughly 1 Bcf/d below what many analysts have said is needed to align supply with demand before winter.

Strong LNG Demand, Low Stockpiles Equals Upward Pressure on Prices.

LNG exports continue to soak up excess supply and feed imbalance worries, NGI wrote. LNG feed gas volumes topped 11 Bcf on Friday – within striking distance of record levels.

“The major European indices hit post-2008 and then all-time highs multiple times throughout the summer – even surpassing Asian prices on a handful of days,” said RBN Energy LLC analyst Lindsay Schneider.

“At the same time, Asian prices have set all-time seasonal records and are now sitting just below the previous single-day high settle from this past January. Usually, as the weather cools heading into fall, so do prices, but that’s unlikely this year as the European gas storage inventory is at the lowest level for this time of year than we’ve seen in recent history, and the time to replenish stocks for the winter is rapidly running out.”

With output failing to stay astride because of lingering pandemic apprehension among oil producers, worries are mounting that underground stockpiles of gas needed to fuel heading needs during the winter season may fall short. This has placed upward pressure on prices, NGI wrote.

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

Natural Gas Price Prediction – Prices Consolidate After Robust Gains

Natural gas prices eased slightly but remain buoyed not far from a 7-year high. There is one storm in the Gulf of Mexico that has a 40% chance of becoming a tropical storm over the next 48-hours. There is another storm that is just coming off Africa. The weather is expected to remain much warmer than normal for the next two weeks according to a report from the National Oceanic Atmospheric Administration. LNG exports rose in the latest week.

Technical Analysis

Natural gas prices eased slightly on Friday but rallied 5% for the week. Support is seen near the 10-day moving average at 4.70. Resistance is seen near the 2014 highs at 6.5. Prices are overbought as the fast stochastic prints a reading of 95 and the RSI prints a reading of 79, both above their respective overbought trigger levels. Medium-term momentum is positive as the MACD histogram prints in positive territory with an upward sloping trajectory which points to higher prices.


LNG Exports Rise

U.S. LNG exports increase week over week. Twenty LNG vessels with a combined LNG-carrying capacity of 74 Bcf departed the United States between September 1 and September 8, 2021, according to shipping data provided by the Energy Information Administration.

Will China Tolerate Higher Inflation on Energy Prices?

Inflation in Brief

Consumer Price Index (CPI), Producer Price Index (PPI), etc.

To measure US inflation rates, we currently use the Consumer Price Index (CPI), which tracks a basket of consumer goods and services that involves food prices & energy prices.

Is underlying inflation really high or has it peaked? Well, it’s difficult to say, as some indicators may contradict each other on that matter…

Tuesday’s CPI report showed the traditional core Consumer Price Index staying at an elevated level of +4.3% year-on-year, according to the Bloomberg survey.

In the case of China’s consumer inflation, it remained generally stable in August, while factory-gate prices registered expansion largely due to the increasing commodity prices: the Chinese CPI rose 0.8% year-on-year in August, a bit lower than 1% in July. The Producer Price Index (PPI) went up 9.5% over the same period in August, so a little faster than 9% in July.

On the U.S. side, the PPI rose +8.3% year-on-year in August (versus estimates at +8.2%) while the Core PPI progressed +6.7% over the same period. It’s higher than the expected +6.6%, but it rose at a slower pace compared to the last month’s increase. Actually, this slowdown in progression might be seen as inflationary pressures being moderated at the moment.

What Impact Does It Have From the Energy Perspective?

Yesterday, we saw that oil prices had fallen due to the announcement that China was using its strategic oil reserves. The Chinese announcement mentioned that millions of barrels were put up for sale in July, according to Bloomberg, which quoted an anonymous government source. In fact, China, as the leading importer of crude, seeks to fight against rising energy prices, signaling that the economic giant will not tolerate too high inflation. However, oil prices rebounded quickly into the same support zone ($67.53-67.94) that we had projected (Fig.1) with the prospect of dwindling reserves in the US, which is the world’s largest consumer.

Moreover, even if we know that China has decided to sell a part of its strategic reserves to limit the pressure of rising raw material prices on industrial production, there is still no information on the amount of oil that is going to be put on the market.

Figure 1 – WTI Crude Oil (CLV21) Futures (October contract, daily)

Today, oil prices rose again – back to yesterday morning’s levels – and the market is turning more optimistic on China-US relations after a phone call between US President Joe Biden and his Chinese counterpart Xi Jinping. Indeed, that phone call had the same effect on the oil market as it had on other assets because any signal that Sino-US relations are improving is seen as positive for global trade and therefore for global financial markets.

On the geopolitical scene, we also noticed that Libya aspires to produce two million barrels of oil per day from 2022, which may indeed sustain the supply.

In summary, we can highlight that China has limited tolerance for the impact of higher inflation on the energy prices – and this is perfectly understandable from the perspective of the leading importer of crude oil. Inflation is certainly an important indicator to keep an eye on in the forthcoming weeks, particularly for anyone interested in energy prices.

Have a nice weekend!

Like what you’ve read? Subscribe for our daily newsletter today, and you’ll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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.