Natural Gas Above $3 Is No Magic; Storage Has to Melt
It took one parabolic move to achieve in a day what seemed impossible in over half a year of natural gas trading: The return to $3 pricing.
But now that it’s done, the question is where do we go from here. And, perhaps more importantly for gas bulls, what will it take to avoid a return to the mid-$2 stranglehold?
Charts suggest a breach of $3.50 in near term if the momentum holds.
A week ago, I wrote that the only real commodity gas bulls probably need now is the thing called patience.
That’s because baking weather in the U.S. South-Centre and power burns from air conditioners being cranked to the hilt day and night to keep up with the maddening heat still couldn’t conspire to lift prices from the $2.40-$2.70 deadlock of the past two months.
That hapless state of the gas bull may have become history now, thanks to maintenance and pipeline issues that have capped daily gas production from crossing the bearish one billion cubic feet, or bcf, mark.
Insane power pricing in some parts of the US — like the 800% spike to $2,500 per megawatt/hour levied by Texas generator ERCOT — also fueled Wednesday’s move on the New York Mercantile Exchange that took the front-month September gas contract on the Henry Hub to a seven-month high of $3.018 per mmBtu, or million metric British thermal units.
In Thursday’s electronic trading ahead of the regular New York session, September gas hovered at just under $3, ranging from $2.945 to $2.998.
He said the momentum was supported by the 5-day EMA, or Exponential Moving Average, dynamically positioned at $2.83 and “remained intact with room for some measured correction towards the breakout zone for a regular retest.” For an idea, he said support could be as low as $2.67 on the 100-day SMA or
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