Signal:
- I am a buyer above the $3.05 level, with a stop at $2.96, and a target of $3.15 above.
- Natural gas markets continue to see a barrier just above, despite the fact that exports are picking up at the moment.
Natural Gas
The natural gas market has been slightly positive in what would be thin holiday trading on Monday, as we continue to see a lot of different things moving in at the same time right now. The warm weather keeps power sector demand elevated in some parts of the country, Texas specifically.
But we also have to keep in mind that storage is astronomical at the moment. This is a market that remains somewhat suppressed due to US production remaining extremely strong, and inventories are roughly 5% above the five-year average. That's a pretty ugly look.
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This is why increasingly supportive demand, not only internally but externally from places like Europe and Asia, hasn't really lifted markets the way most people would think. The balance is improving for the buyers of this market, but there's no real genuine shortage here.
The wild card right now is global liquefied natural gas
Storage stands around 3,200 billion cubic feet, below last year's comparable level, but still comfortably above the five-year norm.
The wild card right now is global liquefied natural gas demand. European gas remains expensive and storage relatively low, which increases the incentive to pull US gas into the export market as winter approaches.
Right now, I see significant resistance between $3 and $3.03. If we can get above $3.03, then I'm looking perhaps for a bullish move closer to about $3.15. The support right now is, I believe, found over the last couple of days between $2.90 and $2.85. This is a market that continues to struggle around $3, and a convincing daily close above $3.03, I think, is a sign that we're going to go higher.
The next EIA storage report is a catalyst, obviously, and of course, weather forecasts. Right now, it still looks like we're just floundering.
We have clear technical areas to pay attention to.
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