Natural Gas at Lower $3s After Mini Crash, But Bulls Say LNG Demand Is Here
From 8-½ month highs of nearly $3.50, US natural gas is clinging to low $3s now after a mini crash over two weeks.
But fret not as LNG demand is here, say bulls in the game.
Most commentators will tell you it’s a different gas market today than the one that was wallowing at mid-$2 for months — after an unbelievably warm winter for 2022/23, followed by all-time highs in daily production and a summer that despite seeing record heat on many days did not translate to runaway demand for LNG, or liquefied natural gas.
Those familiar with the nuances of the global LNG market will also tell you that pricing fundamentals were weakened by steep demand reductions in Europe and a maturing of Asian markets. As such in the first three quarters of the year, European hub and Asian spot LNG prices averaged 70% and 60% below their 2022 levels, respectively.
Adding to that, a six-day swoon from $3.471 per mmBtu, or million metric British thermal units, to $3.07 (at the time of writing) on the New York Mercantile Exchange’s Henry Hub has also damaged somewhat the technical optics of the front-month November contract.
Says Sunil Kumar Dixit, chief technical strategist at SKCharting.com:
“The 50-week EMA, or Exponential Moving Average, of $3.34 is a significant barrier to clear if the gas market is to reacquire its mojo of the past month.”
If gas bulls fail to bust that resistance, profit booking on the mid-September to early-October rally in gas could push prices to support areas, now hovering at the 5-week EMA of $3.04, said Dixit.
He adds:
“Once this zone is broken, expect a further drop to the Weekly Middle Bollinger Band of $2.72.”
“But value-seeking buyers are also likely to surface at that point, resuming the uptrend that could see
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