Natural Gas Price Prediction – Prices Rebound Rising 3.5% for the Week

Natural gas prices moved higher rising 1.8% on Friday and up 3.5% for the week. The weather is expected to be warmer than normal during the next two weeks, according to NOAA. According to NOAA, there are no tropical cyclones expected to form in the Atlantic during the next 48-hours. U.S. natural gas consumption increased due to both the commercial and residential sectors.

Technical Analysis

Natural gas prices moved higher rising on a weekly, but unable to take out the highs that were made in April. Prices face some headwinds and will need to take out resistance near 3.13. Support is seen near the 10-day moving average at 3.02. Short-term momentum whipsawed and moved higher as the fast stochastic generated a crossover buy signal. Medium-term momentum is flat as the MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which points to consolidation.

Consumption Rises

According to the Energy Information Administration, U.S. natural gas consumption increases driven by the residential and commercial sectors. Total U.S. consumption of natural gas rose by 0.7% compared with the previous report week, according to the EIA. Natural gas consumed for power generation declined by 8.0% this week after a 15.4% increase last week. Industrial sector consumption increased by 2.7% week over week. In the residential and commercial sectors, consumption increased by 24.0%.

Natural Gas Weekly Price Forecast – Natural Gas Markets Stall

Natural gas markets rallied a bit during the course of the week after gapping higher on Monday. However, we continue to see a lot of resistance just above current trading, and as a result it is very likely that we are going to continue to see exhaustion being sold into. The $3.20 level is an area where we have seen a lot of trouble, and therefore I think at this point in time we will continue to see a lot of choppy and volatile trading, but it is worth noting that we are at the top of a bigger range.

NATGAS Video 07.06.21

If we were to break down from here, it is likely that the market could go down towards the huge gap underneath which is near the $2.70 level. With this, the market is likely to go looking there during the summer as although there will be a little bit more demand for cooling, the reality is that there is far too much supply out there for the market to chew through. Because of this, I like the idea of selling this market, but you are going to have to be very patient in order to pick up the potential profits that shorting this market this time a year tends to offer.

At this point in time, we could go as low as $2.50, but obviously it is going to take quite a bit of time to reach down towards that area. All things been equal, this is very volatile, but I do not think that natural gas will continue to go higher despite the fact that there is a bit of a commodity boom at the moment.

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

Natural Gas Price Forecast – Natural Gas Markets Tread Water

Natural gas markets have gone back and forth during the course of the trading session on Friday as we continue to kill time just above the $3.00 level. At this point, it does seem to be offering support but quite frankly I think the real support is probably closer to the 50 day EMA. The 50 day EMA is sitting near the $2.90 level, an area that has shown quite a bit of support previously anyway. That being said, the market is likely to find buyers in that area, but if we can break down below it, then it is likely that we will see an acceleration to the downside, perhaps reaching towards the gap underneath. Further adding credence to that gap is the fact that the 200 day EMA is sitting at the bottom of it as well.

NATGAS Video 07.06.21

As far as the upside is concerned, the $3.20 level will continue to be resistance, as it recently had seen a lot of selling pressure. That being the case, the market is likely to continue to see a lot of back and forth as long as we are up in this area, so all things being equal I think that this is a market that probably has more downward pressure than up from a longer-term standpoint, and therefore I like the idea of shorting on signs of exhaustion in of course downward accelerator pressure. Yes, there will be a little bit more demand for natural gas due to cooling needs in the northern hemisphere, but at the end of the day we still have more than enough natural gas to satiate that appetite going forward.

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

Natural Gas Price Fundamental Daily Forecast – Demand Worries Limiting Gains as Specs Wait for Heat to Return

Natural gas futures are trading slightly better on Friday after posting a volatile, two-sided trade earlier in the session. The price action suggests investor indecision and impending volatility. Gains are being capped by another triple-digit build in supply, and as some of the hot weather predicted earlier in the week is being stripped from the forecast.

At 13:22 GMT, July natural gas is trading $3.054, up $0.013 or +0.43%.

Gains are being limited, but so are the losses early in the session. This suggests there are still buyers coming in to provide support. Maybe they believe the storage builds and the seasonal temperatures are short-term events, and eventually we’re going to see a pick-up in demand.

The fundamentals may not be strong enough to trigger a runaway rally, but I do think there is enough bullish news to prevent a price collapse. Buyers are out there, but they may be waiting for a pullback into a value area. The price action is telling me that it’s too early to chase prices higher.

Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 98 billion cubic feet (Bcf) for the week-ended May 28. That was smaller than the increase of 118 Bcf forecast by HIS Markit. Actually, estimates were all over the place, indicating a lack of confidence in the forecasts.

Estimates ahead of Thursday’s report featured a wide range of guesses. Natural Gas Intelligence (NGI) said the consensus pointed to an injection that could fall below both last year’s 103 Bcf injection and the 96 Bcf five-year average.

NGI also reported that Reuters polled 17 analysts, whose estimates ranged from a build of 86 Bcf to 107 Bcf, with a median of 95 Bcf. A Bloomberg survey of 11 analysts had a tighter range of projections, but landed at a median of 94 Bcf. The average estimate of a Wall Street Journal poll also was 94 Bcf, while the NGI model showed a 95 Bcf injection.

Total stocks now stand at 2.313 trillion cubic feet (Tcf), down 386 Bcf from a year ago and 61 Bcf below the five-year average, the government said.

Short-Term Weather Forecast

According to NatGasWeather for June 4 – 10, “National demand will be light today as weather systems bring showers and pleasant highs of 70s-80s over Texas and the East. The West remains hot as strong high pressure produces highs of mid-80s to 100s, hottest over California and the Southwest.

Upper high pressure will expand across the central, northern and eastern U.S. this week-end through next week with highs of mid-80s to lower 90s, with 100s across the Southwest. Showers and cooling will push into the West Coast this weekend with highs of 60s and 70s, ending the recent heatwave.

Overall, low national demand into Saturday, then increasing to high next week.”

Daily Outlook

Although the official start of the summer season is still weeks away, the mention of heat in the forecast for next week has created a bullish buzz for natural gas futures. However, the price action the past three sessions, following Tuesday’s upside price spike suggests that the major buyers aren’t convinced yet.

Look for a bullish tone to possibly develop on a sustained move over $3.089, and for a bearish tone to possibly develop on a sustained move under $3.054.

Although a bearish tone could develop, we don’t expect to see a major change in trend. We also think any weakness will be a short-lived move.

June is expected to be hot overall, according to Bespoke Weather Services. It’s just sputtering at the start. The 10-15 day forecast isn’t bearish, per se, just not as bullish as it was at the start of the week.

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

Natural Gas Price Prediction – Prices Slip Following Inventory Report

Natural gas prices eased slightly on Thursday following the Energy Department’s inventory report. The weather is expected to remain warmer than normal for the next two weeks according to a forecast from the National Oceanic Atmospheric Administration. Underground natural gas working storage capacity in the Lower 48 states has remained relatively flat since 2012.

Technical Analysis

Natural gas prices moved lower easing for the 2nd consecutive trading session but holding above support near the 10-day moving average at 3.03. Additional support is seen near the 50-day moving average at 2.92. Short-term momentum is flat as the fast stochastic moves sideways where the stochastic and the signal line are at the same level. Medium-term momentum is also flat as the MACD (moving average convergence divergence) histogram prints near the zero index line with a flat trajectory which points to consolidation.

Inventories Rise Less than Expected

Natural gas in storage was 2,313 Bcf as of Friday, May 28, 2021, according to the EIAs. This represents a net increase of 98 Bcf from the previous week. Expectations were for a 110 Bcf build according to survey provider Estimize. Stocks were 386 Bcf less than last year at this time and 61 Bcf below the five-year average of 2,374 Bcf. At 2,313 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Continues to Flirt with $3.00 in General

Natural gas markets have drifted a little bit lower during the trading session on Thursday as we continue to see the market hang around the $3.00 level. Ultimately, this is a market that I do believe eventually will continue to see a lot of pressure, and therefore it is possible that we continue to have a lot of questions. Ultimately, this is a market that I think will go looking towards the 50 day EMA at the $2.90 level. That is an area that has been supportive more than once, so therefore it makes quite a bit of sense that it would continue to be the case going forward.

NATGAS Video 04.06.21

I think at this point in time it is likely to see a lot of volatility, and people worry about whether or not there is going to be enough demand. After all, temperatures in the northern hemisphere are starting to rise but at the same time we also have the commodity boom in general, so that may have a little bit of a “knock on effect” in this market, but at the end of the day this is a market that I do think is getting stretched and cyclically typically does not do very well at this time of year.

There is obvious major resistance above at the $3.20 level, and we are essentially stuck in this overall range. All things been equal, this is a market that I do think breaks down as soon as hotter temperatures arrive in the United States, and perhaps the first cracks in the commodity boom could be the catalyst as well and is without a doubt the natural gas markets are by far the most fragile.

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

Natural Gas Price Fundamental Daily Forecast – EIA Report Could Show Another Potentially Disappointing Build

Natural gas futures are inching lower as traders await the release of the latest government storage report at 14:30 GMT. The market is currently testing a key technical area. Trader reaction to this area should determine the near-term direction of the market.

Fundamentally, prices are being pressured by expectations of another potential bearish storage injection and a bearish change in the short-term weather forecasts. Spot gas prices around the country continued to surge, providing some support, despite a plunge in Southern California prices.

At 11:15 GMT, July natural gas futures are trading $3.057, up $0.018 or -0.59%.

Energy Information Administration Weekly Storage Report

This week, the EIA is expected to release another potentially disappointing weekly storage report. Estimates ahead of today’s report featured a wide range of guesses. Natural Gas Intelligence (NGI) said the consensus pointed to an injection that could fall below both last year’s 103 Bcf injection and the 96 Bcf five-year average.

NGI is also reporting that Reuters polled 17 analysts, whose estimates ranged from a build of 86 Bcf to 107 Bcf, with a median of 95 Bcf. A Bloomberg survey of 11 analysts had a tighter range of projections, but landed at a median of 94 Bcf. The average estimate of a Wall Street Journal poll also was 94 Bcf, while the NGI model showed a 95 Bcf injection.

Working gas in storage as of May 21 stood at 2,215 Bcf, which is 381 Bcf below the prior year and 63 Bcf below the five-year average, according to EIA.

Short-Term Weather Outlook

NatGasWeather said the 15-day outlook remained “plenty hot enough” for June 6-12. However, like the overnight European model, the latest Global Forecast System shed a few cooling degree days for the 10- to 15-day period by weakening strong upper high pressure enough to drop temperatures by several degrees over much of the country.

“The weather data needs close watching for this important June 13-17 period because any further cooler trends, and it could lead to disappointment,” NatGasWeather said.

Daily Outlook

Although the official start of the summer season is still weeks away, the mention of heat in the forecast for next week has created a slightly bullish buzz for natural gas futures. However, the price action the past two sessions, following Tuesday’s upside price spike suggests that the major buyers aren’t convinced yet.

Look for a bullish tone to possibly develop on a sustained move over $3.089, and for a bearish tone to possibly develop on a sustained move under $3.054.

Although a bearish tone could develop, we don’t expect to see a major change in trend. We also think any weakness will be a short-lived move.

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

Natural Gas Price Prediction – Prices Ease As Production Rises

Natural gas prices eased on Wednesday following Tuesday’s rally. Throughout most of the Northern portion of the United States, warm weather is expected to continue to buoy cooling demand. U.S. production of natural gas topped 92 Bcf per day, according to the EIA.

Technical Analysis

Natural gas prices eased after rallying for a 2-consecutive trading session. Prices are poised to test target support near the May highs at 3.21. Support is seen near the 10-day moving average at 3.02. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. Short-term momentum is neutral as the fast stochastic reversed after generating a crossover buys signal.

U.S. Production Rises

U.S. production of natural gas tops 92 Bcf per day, according to the EIA. The average total supply of natural gas rose by 0.4% compared with the previous report week. Dry natural gas production grew by 0.7% compared with the previous report week to 92.4 Bcf per day. At close to 93 Bcf per day, the EIA estimated production on Sunday was the highest since mid-April 2020. Average net imports from Canada decreased slightly by 0.2% from last week.

Natural Gas Price Forecast – Natural Gas Pressuring Top of Range

The natural gas markets have gone back and forth during the course of the session on Wednesday as we continue to struggle between the $3.00 level and the $3.20 level. This is the top of a larger consolidation area, and it is worth noting that there has been a significant “commodity boom” that has a bit of a “knock on effect” over here. The 50 day EMA is reaching towards the $2.90 level, an area that has been massive support recently. If we were to break down below there, then it is likely that we could break down to go looking towards the gap underneath, which is also supported by the 200 day EMA right now.

NATGAS Video 03.06.21

To the upside, the $3.20 level offers significant resistance, as we have seen multiple times. The candlestick for the trading session on Wednesday looks like it is showing signs of exhaustion as well, so I would anticipate that we are probably going to drop towards the $3.00 level. Keep in mind that the market also has to keep in mind that the demand for natural gas is probably going to drop in the short term, as temperatures start to rise during the course of the next several months, as we are more than likely going to see the supply/demand equation play out. All things been equal though, there is a certain amount of foreign demand for LNG coming into the picture. Because of this, I expect choppy behavior, but I also recognize that sooner or later we will more than likely roll over.

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

Natural Gas Price Fundamental Daily Forecast – Strengthens Over $3.089, Weakens Under $3.054

Natural gas futures are edging lower on Wednesday after spiking into their highest level since May 18 the previous session. The move was fueled by a drop in supply over the weekend and a jump in spot gas prices. Today’s early weakness suggests there may have been a slight change in the 10-15 day weather forecast overnight.

At 12:25 GMT, July natural gas futures are trading $3.079, down $0.025 or -0.81%.

Over the last few weeks, bullish traders have been building a support base on the back of strong liquefied natural gas (LNG) export demand and weak production. However, gains have been capped by seasonal weather patterns. That is until this weekend when several weather services began to see potentially bullish weather patterns developing.

Bespoke Weather Services Outlook

“Basically, weather is about as bullish as it can get, and even though weather is not known as the driver of prices in the warm season, as it often is in winter, at this magnitude, it certainly cannot be ignored,” said Bespoke Weather Services.

The forecaster said the 15-day outlook turned “notably hotter” over the weekend, particularly in the six- to 10-day period in the Midwest and East. The firm said some 90-plus degree high temperatures are now expected as far north as Minneapolis to Boston in that time frame, Natural Gas Intelligence (NGI) reported.

This boosts gas-weighted degree days (GWDD) to “near-record levels” on at least a couple of days early next week, despite the fact that the West cools off after the next few days and there is no notable heat (relative to normal) in Texas and much of the South, according to Bespoke.

“with GWDDs running just over 20 above normal over the next 15 days, assuming the current forecast is correct, a back half of June that is just near the five- or 10-year normal would be within a few GWDDs of the hottest on record, based on the national GWDD count, quite an impressive feat if it holds,” the forecaster said. “Intensity of heat does lower somewhat in the 11- to 15-day, but not yet even back to normal levels.”

NatGasWeather Outlook

According to NatGasWeather for June 2-8, “National demand will be light through Saturday as weather systems bring showers and pleasant highs of 60s-80s east of the Rockies, including 70s-80s over Texas. The West remains hot as strong high pressure produces highs of mid-80s to 100s, hottest over California and the Southwest. Upper high pressure will expand across most of the U.S. this weekend with highs of mid-80s to lower 90s, with hotter 100s across the Southwest. Showers and cooling will push into the West this weekend with highs of 60s and 70s to end the current heatwave. Overall, low demand through Friday, then increasing to high for next week.

Short-Term Outlook

A bullish pattern may be developing but it all depends on trader reaction to a short-term retracement zone at $3.054 to $3.089. This zone is controlling the near-term direction of the market.

Look for an upside bias to develop on a sustained move over $3.089 with the first objective $3.204, followed closely by $3.245.

A slight downside bias could develop on a sustained move under $3.054. This won’t change the trend to down, but it will likely indicate the market has to spend more time developing its support base.

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

Natural Gas Price Forecast – Natural Gas Markets Gap Higher

Natural gas markets have gapped higher to rocket towards the $3.13 level early on Monday, but it is worth noting that the $3.20 level has been massive resistance. I think there is a real fight on our hands here, and as long as that level holds, we will eventually get the breakdown that typically accompanies natural gas this time of year. That being said, I believe that this market will continue to focus on multiple things at the same time, not the least of which will be the fact that the weather in the United States recently has been somewhat cool, but it is also worth noting that eventually the temperatures rise and therefore demand for natural gas will start to falter.

NATGAS Video 02.06.21

However, there is a general “commodity boom” at the moment which is running countercyclical to the norms and therefore I think what we are seeing here is natural gas get a little bit of a “knock on effect” from other commodities overall, and there could even be a little bit of a psychological influence with the US dollar dropping overall.

With all that being said, I still think that we have high potential to fall rather hard at one point or another this summer, but I would have to admit that a break above the $3.30 level would blow the roof off of the market, and at that point it is hard to tell where we would go. I do think that we are getting kind of out of the realm of normalcy here, so regardless of the next move, it should be done with a relatively small position as natural gas has been extraordinarily erratic.

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

Natural Gas Price Fundamental Daily Forecast – New Bullish Forecasts Driving Speculative Buying

Natural gas futures are jumping on Tuesday due to hotter than expected temperatures over the weekend. The move was strong enough to take out a potential resistance area, putting the market on the strong side of support at $3.089 to $3.054. The early price action suggests that upside momentum is building which could mean buyers are getting ready to challenge the recent top at $3.204.

At 14:58 GMT, July natural gas is trading $3.111, up 0.125 or +4.19%.

Short-Term Weather Forecast

According to NatGasWeather for June 1 to June 7, “National demand will be light the rest of the work week as comfortable highs of 70s and 80s rules most states east of the Rockies. It’s gotten quite hot over the West with highs of mid-80s to 100s, breaking records in some areas for regionally strong demand. However, and most importantly, the latest overnight and early morning weather data maintained a very warm U.S. pattern arriving this coming weekend with highs of 80s across the northern U.S. and upper 80s to 100s over the southern U.S., hottest over the Southwest. Overall, low demand through Friday, then increasing to high by early next week.”

Energy Information Administration Weekly Storage Report

The EIA reported an injection of 115 Bcf of natural gas into stockpiles for the week-ended May 21. Natural Gas Intelligence’s (NGI) model called for a 107 Bcf injection.

The actual number was also greater than the 105 Bcf increase in storage a year earlier and the five-year average injection of 91 Bcf.

The strong injection lifted natural gas inventories to 2,215 Bcf. That compared with the year-earlier level of 2,596 Bcf and the five-year average of 2,278 Bcf.

Daily Outlook

The weekend weather data gained several Cooling Degree Days (CDDs) for June 6-12 since Friday’s close and a reason why prices are higher after the long weekend break, according to NatGasWeather.

NatGasWeather also said, “The latest overnight and early morning weather data maintained a very warm U.S. pattern June 7-12 with highs of 80s across the northern U.S. and upper 80s to 100s over the southern U.S., hottest over the Southwest.”

Bespoke Weather Services added, “Over the weekend, forecasts trended ‘notably hotter’ by showing additional heat for the Midwest and East in the six- to 10-day time frame.”

“Assuming Tuesday’s forecast holds, near-normal temperatures during the back half of June would be enough to make this month one of the hottest on record in terms of GWDD, according to the firm.

The price action on Tuesday suggests we may be seeing an early weather market so look for heightened volatility as the forecasts could change from day-to-day.

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

BP invests $220 Million in U.S. Solar Projects

The deal, for assets with production capacity of 9 gigawatts, marks BP’s first independent investment in solar since buying a stake in Europe’s largest solar developer, Lightsource, in 2017.

BP said the new assets will be developed and operated through its 50-50 joint venture with Lightsource BP.

BP CEO Bernard Looney last year launched a strategy to sharply reduce carbon emissions by 2050 by reducing oil output and growing its renewables business 20-fold between 2019 and 2030 to a capacity of 50 gigawatts (GW).

The deal will grow BP’s renewables pipeline from 14GW to 23GW. The company expects to start developing around 2.2 GW of the acquisition’s pipeline by 2025.

BP will integrate the new solar output into its large U.S. power trading business, which includes onshore wind and natural gas electricity. In future, it will also have offshore wind from a project it is developing off the East Coast with Norway’s Equinor, Dev Sanyal, BP head of gas and low carbon energy, told Reuters.

BP is confident it can reach returns on investment of 8% to 10% on its renewable investments, Sanyal added.

“This acquisition gives us a very significant development pipeline in one of the most important markets,” Sanyal said.

The projects acquired are spread across 12 U.S. states, with the largest portfolios in Texas and the Midwest.

(Reporting by Yadarisa Shabong in Bengaluru and Ron Bousso in London; Editing by Devika Syamnath and Barbara Lewis)

OPEC, Russia seen gaining more power with Shell Dutch ruling

By Dmitry Zhdannikov

LONDON (Reuters) – Climate activists who scored big against Western majors last week had some unlikely cheerleaders in the oil capitals of Saudi Arabia, Abu Dhabi and Russia.

Defeats in the courtroom and boardroom mean Royal Dutch Shell, ExxonMobil and Chevron are all under pressure to cut carbon emissions faster. That’s good news for the likes of Saudi Arabia’s national oil company Saudi Aramco, Abu Dhabi National Oil Company and Russia’s Gazprom and Rosneft.

It means more business for them and the Saudi-led Organization of the Petroleum Exporting Countries (OPEC).

“Oil and gas demand is far from peaking and supplies will be needed, but international oil companies will not be allowed to invest in this environment, meaning national oil companies have to step in,” said Amrita Sen from Energy Aspects consultancy.

Climate activists scored a major victory with a Dutch court ruling requiring Royal Dutch Shell to drastically cut emissions, which in effect means cutting oil and gas output. The company will appeal.

The same day, the top two U.S. oil companies, Exxon Mobil Corp and Chevron Corp (CVX.N), both lost battles with shareholders who accused them of dragging their feet on climate change.

“It looks like the West will have to rely more on what it calls “hostile regimes” for its supply,” joked a high-level executive from Russia’s Gazprom oil and gas group, referring to energy companies around the world owned completely or mostly by the state.

Saudi Aramco, Adnoc and Gazprom all declined to comment. Oil major Rosneft, in which the Russian state has the biggest stake, also declined to comment.

A senior Saudi Aramco staffer said the court ruling would make it easier for OPEC to ramp up production.

“It is great for Aramco,” the staffer said.

Western oil majors like Shell have dramatically expanded in the last 50 years, as the West sought to cut its reliance on energy from the volatile Middle East, and from Russia.

Those same Western energy majors, including BP and Total, have set out plans to sharply reduce emissions by 2050. But they face growing pressure from investors to do more to meet U.N.-backed targets to limit global warming.

Saudi Aramco, listed on the Saudi bourse but majority state owned, is not under the same sort of pressure to cut its carbon emissions, although the kingdom’s rulers aim to sharply increase the country’s use of renewables.

Gazprom expects demand for natural gas to grow in the coming decades and for it to play a bigger role in energy consumption than renewable sources and hydrogen.

Western oil majors control around 15% of global output, while OPEC and Russia have a share of around 40 percent. That share has been relatively stable in the last decades as rising demand was met with new producers like smaller private U.S. shale firms, which today face similar climate-related pressures.

PEAK DIVIDENDS

Since 1990, global oil consumption has grown to 100 million barrels per day from 65 million bpd, with Asia providing the lion’s share of growth.

Countries such as China and India have made no pledges to reduce oil consumption, which on a per capita basis is still a fraction of the levels in the West. China will rely heavily on gas to cut its huge coal consumption.

The International Energy Agency, which looks after energy policies of the West, issued a stark appeal last month to the world to essentially scrap all new oil and gas developments. But it gave no clear formula on how to reduce demand.

Despite pressure from activists, investors and banks to cut emissions, Western oil majors are also tasked with maintaining high dividends amid heavy debt. Dividends from oil companies represent significant contributions to pension funds.

“It is vital that the global oil industry aligns its production to the Paris goals. But that must be done in step with policy, changes to the demand side, and the rebuilding of the world’s energy system,” said Nick Stansbury from Legal & General, which manage £1.3 trillion ($1.8 trillion) in assets on behalf of savers, retirees and institutions.

“Forcing one company to do so in the courts may (if it is effective at all) only result in higher prices and foregone profits,” he said. Legal & General, one of the world’s largest fund managers, holds assets in most oil majors.

Climate lawsuits have been filed in 52 countries in the past two decades, with 90% of those in the United States and European Union, risk consultancy Verisk Maplecroft said.

“In the West, energy investments will peak on fears and concerns over regulations and court rulings. Then, we will see peak dividends,” said the Aramco executive. Aramco pays the highest annual dividend of $75 billion.

Over the past five years, the IEA has been predicting a large oil shortage and an oil price spike due to a lack of investments following a 2014-2017 oil price crash.

An oil price rally coupled with the declining strength of oil majors would mean a large wealth transfer from the West to countries like Russia and Saudi Arabia, until demand starts declining not only in the West but in Asia too.

“The same oil and gas will still be produced. Just with lower ESG standards,” said an executive from a Middle Eastern producer, who previously worked for an oil major, referring to environmental, social and governance performance measurements.

(Additional reporting by Alex Lawler, Ron Bousso, Noah Browning in London, writing by Dmitry Zhdannikov; Editing by William Maclean)

Natural Gas Price Fundamental Weekly Forecast – Cooling Demand, Strong LNG Export Volumes Providing Support

Natural gas futures finished marginally higher last week with volatility driven by a bearish government storage report and increased expectations for national cooling demand in June. Despite these two offsetting events, strong liquefied natural gas (LNG) export volumes continued to provide stabilizing support.

Last week, July natural gas futures settled at $2.986, up $0.009 or +0.30%.

Energy Information Administration Weekly Storage Report

Prices plunged last Thursday after the EIA reported an injection that exceeded the high end of analysts’ estimates and signaled weaker demand than most had in their models.

The EIA reported an injection of 115 Bcf of natural gas into stockpiles for the week-ended May 21. Natural Gas Intelligence’s (NGI) model called for a 107 Bcf injection.

The actual number was also greater than the 105 Bcf increase in storage a year earlier and the five-year average injection of 91 Bcf.

The strong injection lifted natural gas inventories to 2,215 Bcf. That compared with the year-earlier level of 2,596 Bcf and the five-year average of 2,278 Bcf.

Bespoke’s 15-Day Weather Forecast

Bespoke Weather Services’ 15-day forecast as of Friday included a modest increase day/day in gas-weighted degree days, with the American and European models both showing additional heat in the eastern third of the nation, NGI reported.

By late in the first week of June, “cooling demand jumps back above normal and remains there through day 15, and likely beyond, given the current depiction from all the latest model guidance,” Bespoke said. “This continues to increase the odds of a hotter June, which has been our idea for a long time, though we do expect some variability mixing in at time.”

It “is uncommon to see pure weather trading be a successful strategy in summer, as opposed to winter, and the supply/demand balance is undeniably a good deal weaker than it had been for all of April and into early May,” Bespoke added, referring to the U.S. Energy Information Administration (EIA) latest storage report.

Weekly Forecast

Despite the volatile trade last week and the knee-jerk reaction to the surprisingly bearish EIA report, our analysis is still bullish for natural gas. The market is expected to be choppy at times because by nature, natural gas futures are a highly volatile market.

The EIA data may have been bearish when compared to the consensus but it may end up to be the only triple-digit report for the season, which has bullish implication. By comparison, last year saw five 100 Bcf-plus injections, according to Tudor, Pickering, Holt & Co. (TPH).

Not only is the weather expected to be supportive as we approach the summer months, but LNG feed gas volumes are expected to rise, likely putting them to near record levels.

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

 

Natural Gas Price Forecast – Natural Gas Continues Sideways Movement

Natural gas markets have gapped to kick off the trading session on Monday, and then simply went back and forth. The market is above the $3.00 level, an area that of course would attract a certain amount of attention due to the fact that it is a large, round, psychologically significant figure. The market sees a significant amount of noise all the way to the $3.20 level, where we have seen quite a bit of selling pressure above.

NATGAS Video 01.06.21

To the downside, the $2.90 level offers support, as we have seen multiple times over the last couple of weeks and now, we have the 50 day EMA reaching towards it. With that being the situation, I believe that the market will continue to go sideways overall and eventually make more of an impulsive move. Sooner or later, we will get a candlestick that we can follow, and I think if we can break down below the 50 day EMA, then it is likely that the market goes towards the $2.70 level underneath which is where the gap sits. We have yet to fill that gap, which is something we almost always do in the futures market, so I do think that it is only a matter of time before we break down based upon that alone.

Adding influence to the downside will be the warmer temperatures coming to the United States eventually, but I must admit that it has taken a while for that to show up in certain parts of the country. That being said, eventually we will see demand destruction, despite the fact that there is demand for LNG overseas.

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Europe’s Gas Storage Stocks Continue to Face Challenges on Road to Recovery

In May, the plot has taken another turn as the operations at several LNG terminals were suspended adversely impacting Europe’s import capacity, at a time when injections into the storages are lagging far behind the average pace. Following the shutdown of Montoir installation since early May and the planned maintenance on Dragon LNG that started in mid-May, Adriatic LNG halted send-out last week.

Both French and Italian terminals should resume operations in early June while the UK’s installation is expected to get back to work by the middle of next month. But it seems unlikely that European LNG imports will significantly improve, as the three terminals are coming back online at an unfavorable time in terms of competition with Asian importers that recently become much more active.

In addition to stronger seasonal demand for air-conditioning, buyers in East Asia still have fresh memories of this past winter which will provide support for restocking consumption in Q2 and Q3. Given the ongoing Norwegian maintenance succeeded by the outages on Yamal and Nord Stream pipelines in July, Europe can hardly relax in the coming months.

The opinions expressed in this blog are mine only and do not reflect the views of my employer

 

Is Bitcoin’s High Computing Power its Achilles Heel?

Data collated from the Cambridge Center for Alternative Finance (CCAF), show the world’s most popular crypto asset presently consumes around 13.37-gigawatt annum— 0.6% of global electricity supply, or roughly equivalent to the annual energy draw of an emerged market countries as Sweden.

Elon Musk, some weeks stunned crypto investors arbitrarily when he unexpectedly announced via Twitter, Tesla was no longer accepts Bitcoin as a means of payment citing environmental concerns.

Bitcoin mining’s energy-intensive process was the major reason behind’s Elon Musk decision as the most popular crypto asset relies on a significant amount of electricity generated from coal known for high carbon prints and toxic gases.

“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Elon Musk said.

Just recently the government of Iran recently placed an embargo on the mining of bitcoin as revealed by the country’s president, Hassan Rouhani, partly because of Bitcoin’s energy-intensive process triggering blackouts in a significant number of Iranian hubs.

Miners on the blockchain often use powerful computing power in solving complex mathematical tasks that effectively facilitate a bitcoin transaction to go through, triggering Bitcoin miners to be rewarded for their efforts with the digital asset.

The energy requirement in auditing such bitcoin transactions requires a huge amount of computing power which translates to a huge amount of electricity.

Iranian fiscal officials further revealed most of the energy consumption gotten from Bitcoin mining is largely attributed to illegal miners, or those operating such permits.

Although, Sam Bankman-Fried, the founder of Crypto derivatives exchange FTX recently disclosed that most of the current energy usage will decay away as block rewards go down the rest of the energy usage will scale linearly with Bitcoin’s price.

Sam also disclosed that the Ethereum blockchain’s recent upgrade to proof of stake will enable a less energy-intensive system that will likely address some of the climate concerns, Still, a growing number of environmentalists are increasingly becoming impatient on the environmental impact of Bitcoin mining.

“Today, Bitcoin mining creates about the same pollution footprint per unit of energy as natural gas,” says Alex de Vries, who oversees Digiconomist, a company that monitors Bitcoin’s electricity usage. “That’s because hydro in China offset much of the effect of coal in that nation and other parts of the world.”

Not forgetting China accounts for more than three-quarter of the Bitcoin mining activity globally as of April 2021,

However, current reports reveal that China’s recent ban is more of an economic issue with its officials trying to prevent an economic shock just in case a Crypto bubble burst as the world’s second-biggest economy aims for a stable and viable financial architecture immune to volatility that often prevails in many Crypto assets.

Present price actions show the environmental concerns of Bitcoin seem to be receding as it broke above $35,000 price levels after Elon Musk disclosed, he held “potentially promising talks” with North American bitcoin miners on how to make Bitcoin’s mining process more environmentally friendly.

Natural Gas Weekly Price Forecast – Natural Gas Continues to Flirt With Three Dollars

Natural gas markets have gapped lower to kick off the week but then shot straight up in the air to show signs of resiliency. That being said, there is a significant amount of resistance in the $3.00 level. At this point time, the market is likely to see that area as difficult to overcome, so I think that we continue to see plenty of sellers sooner or later, as we are at the top of a larger consolidation area. At this point, the market is likely to see a lot of choppy behavior more than anything else, as we go looking towards the bottom of the range. The $2.45 level is an area that will attract a lot of attention, so I think that makes quite a bit of sense that there would be a target there.

NATGAS Video 31.05.21

All things been equal, the market should continue to chop back and forth and cause quite a bit of noise. Ultimately, the market is likely to see the cyclical trade come back into the picture, as temperatures are warming up in the United States and it should drive down a bit of the demand. The market is simply treading water going back and forth over the last several months, and I think now that we are at the top of the range it is likely that we see negativity.

It is also worth noting that the 50 week EMA is trying to cross above the 200 week EMA, so that offers a little bit of dynamic support as well. That being said, the market is likely to see more of the same action that we have seen for quite some time.

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Natural Gas Price Forecast – Natural Gas Markets Rally to End The Week

Natural gas markets have rallied significantly during the trading session on Friday to finish the week on a positive hand. The $3.00 level above is significant in its resistance, but perhaps more importantly at psychology. I think at this point in time it is likely that the market is going to continue to see a lot of noisy behavior in this area, and I also think that the indicator that I am paying the most attention to over the next couple of weeks will be the 50 day EMA, which is approaching price action and has been important more than once. It is when we break down below there that I think you will see an acceleration of the selling pressure to reach down towards the gap underneath that has yet to be filled.

NATGAS Video 31.05.21

To the upside, I think that the $3.20 level is a major ceiling in the market, but I do not necessarily believe that we get anywhere near it, as we are more towards the top of the overall consolidation range, and you could make an argument that part of what we have seen lately has been a reach for liquidity, so sellers can come back in. Yes, there will be more demand for natural gas due to the reopening trade, but quite frankly this is by far the biggest laggard when it comes to the commodity markets, so I think it will be the first to give way to the downside. At this point, I think the market will continue to offer selling opportunities on signs of exhaustion after short-term spikes in price.

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