A pullback in gas prices will affect stockmarkets

I’m calling Natural Gas prices back to the $5 mark.

In yesterday’s note, I expressed the extremes at which it is currently trading.

and below is a chart of Woodside’s stock price overlaid the U.S. Natural Gas price…..Woodside is the orange line.

August 25, 2022

by Rob Zdravevski


Careful chasing Natural Gas parabola’s

When prices go parabolic and reach extreme levels…..why should we expect a different outcome in Natural Gas prices this time?

The chart below shows you moments when the Henry Hub Natural Gas price has traded at 2.5 standard deviations above its weekly and registered a weekly Overbought reading on its RSI.

Furthermore, I’ve thrown in the percentages Natural Gas had traded above its 200 week moving average.

This tells me that one shouldn’t be chasing a long position in this rarified air.

While it’s a sellers market, not a buyers one….it doesn’t mean, I’m going to ‘short’ it either….

Today, Natural Gas is trading at $9.33.

I’ll look for it to top out around $10.60 or so.

I’ll look for notably lower prices before considering a ‘new long’ position.

August 24, 2022

by Rob Zdravevski


Gravity and the JKM LNG price

The Japan Korea Marker (“JKM”) fell 25% last week of which 22% occurred on Friday alone.

It closed at $25.25.

I expect it to (and it’s trying to) retrace or mean revert that parabolic move seen through 2021.

$22.50 is now an important support level which represents a 62% retracement from the $6 trough seen in March 2021.

Ultimately, $15.20 would be a better place to rest once it has ‘blown-off’ that sharp rally.

In the weekly chart below, the rolling mean illustrated is a 200 week moving average.

That average currently reads $9.55, however I expect it to roll (sharply) higher in the coming months, in essence converging
to a point that may be close to the $15 level mentioned above.

So, what does this mean?

Sellers should have already been locking in their forward price over the past few months, while I also expect lower equity prices in LNG producers as JKM pulls back a little more.

So, patience is a virtue for buyers.
Wait for your price, Wait for your pitch.

n.b. The JKM price reflects the spot market value of cargoes delivered ex-ship into Japan, South Korea, China and Taiwan.

January 17, 2022
by Rob Zdravevski

Nat Gas may halve before it doubles again

Lately, I’ve been calling an interim top in Crude, highlighting extreme overboughts in Gasoline, Heating Oil and Distillates and a peak in the Australian Dollar.

Natural Gas has also touched some extreme overboughts where a Long trading exit target of $4.07 was hit.

Now, I think petroleum prices ease lower over the medium term while Natural Gas may nearly halve in price in the next 10 months or so.

Crude prices lead Natural Gas prices. Crude is down $12 since I made my recent ‘top’ call.

Below is picture of how I think it may play out.

You can see the resistance and supports it needs to test or break and this will help tell me if I’m wrong.

If the scenario below evolves, you’ll also see weaker (commodity) currencies such as the AUD and CAD while the U.S. Dollar strengthens.

August 9, 2021

by Rob Zdravevski


It’s a Gas, Gas, Gas !

I’m nearing some profit taking in #naturalgas

On April 30, 2021 I wrote about a potential Long trade in Natural Gas to watch out for, pending a technical analysis breakout.

The current profit taking suggestion is within a medium term context of a major bull market occurring in the Natural Gas price.

The breakout occurred around June 10th, 2021 and we’ve seen a 26% rise, since then.

Probability now suggests that Natural Gas takes a pause around the $4.07 mark.

July 22, 2021

by Rob Zdravevski


Natural Gas – the mother of all breakouts?

Here is a 20 year chart covering the price of Henry Hub Natural Gas, plotted on a weekly basis.

I’ve been watching this potential Long trade for months and the timing will play out by mid-July 2021, at the latest.

A weekly close above $3.03 could see this commodity move to $4.90 reasonably quickly.

*this is my personal commentary, not advice.
* as always do your own research.

April 30, 2021
by Rob Zdravevski

A Suez Crisis and higher Natural Gas

In Egypt….

two Presidents have been removed from power,
human rights are being violated,
christians are being suppressed and
people are being killed whilst protesting

What if the Muslim Brotherhood (an Iranian proxy) takes power in the world’s most populous Arab nation which borders Israel and straddles the Suez Canal?

Will this make the world nervous?

It’s possible that we see Western intervention to correct matters and protect their billions of dollars spent on military aid over the decades.

Oil prices will probably rise further but I’ll speculate that Natural Gas prices will rise more so.

The price of Natural Gas have been falling for years but I think this will reverse.

When oil becomes more expensive, I think demand for cheaper alternatives such as Natural Gas will be sought and oil won’t be the only fuel source that buyers will settle for.

Furthermore, I expect gas projects (including American shale) will not come on-stream as quickly as expected, due to the rising cost of capital and overall cost overruns.

It is rare that when a commodity is in high demand that it stays cheap for too long.

Hope equals complacency

Something that I have difficulty explaining tells me that the Cyprus situation can’t end well. This feeling is biased by the complacency exhibited by European politicians.

Loosely, there is an assumption it will be fixed by somebody. Almost a similar feeling that permeated prior to Lehman Brothers collapsing. There is also a distancing by Germany, that someone else will save Cyprus.

Keep in mind that Angela Merkel has an election in September 2013. Why would she use German money to save Cyprus following the backlash she experienced in Greece.

But here come the Russians.

I have read that $40 or $50 billion of private Russian deposits sit within Cyprus’ offshore banking haven.

Here is how you would do a sovereign bailout deal.

For a $10 billion bailout, Russia gets to protect its citizens deposits in Cyprus, take over a huge slice of Cypriot debt (which they’ll eventually make a profit from, as it’s currently trading at 65 cents in the dollar) and take ownership or security over Cyprus’ Aphrodite gas field.

The Aphrodite gas field has natural gas reserves of about 7 trillion cubic feet (tcf) worth around $45 billion. That is enough gas to meet the energy needs of 7 million households for 20 years. Cyprus only has a population of 1 million people.

Incidentally, Aphrodite sits next to Israel’s larger Leviathan (16 tcf) and Tamar (8 tcf) fields.

It possibly makes for some interesting scenarios involving the politics of Israel, Lebanon, Turkey, Syria, Iran & Russia????

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