Decline in Natural Gas complete

That’s your lot.

A round trip move for Natural Gas, rom $2.50 to $10 and back to $2.50 all within 22 months.

Regarding my short call from $10.00 to my target of $2.50 was reached today.

That’s your lot.

The fat part of the trade has been had.

The mean reversion from those heights back to and below its 200 week moving average also corrected that parabola seen a year earlier.

It’s now Oversold on a weekly basis.

February 2, 2023

by Rob Zdravevski

Urea – Accumulate Signal

U.S. Gulf Urea prices are exhibiting Oversold ‘extremes’.
Backwardation (in forward months contracts) makes for a bullish case too.

The Middle East Urea prices are nearly Oversold too.
Natural Gas (Henry Hub) are approaching Oversold as is the price of Wheat (see correlation)

January 26, 2023
by Rob Zdravevski

Nat Gas decline nearly done

Only about 30 cents to go and Natural Gas reaches my $2.50 target.

But 30 cents doesn’t matter considering my original Short call on Natural Gas from its lofty $10 mark seen several months ago.

You can read the time series of this view in all of the links below, including some that discuss correlations to Australian inflation.

The focus now is to consider a Long position in Natural Gas…..or a 2nd or 3rd derivative of that idea.

January 26, 2023
by Rob Zdravevski

Watching for a ‘lower low’ in Nat Gas

Perverse as it may seem (in the midst of winter), the price of Natural Gas is falling again (for various fundamental reasons) and attempting a re-test of its recent $4.75 low.

If it does, then $3.80 is plausible.

Followers of my writing would recall my notes of calling lower Gas prices from the $10 mark.

15 months earlier, I equally wrote of a pending rally, so I remain objective how I read the tape.

But what if Henry Hub Natural Gas breaks below $3.80 and fall 50% from here, down to $2.50?

December 23, 2022

by Rob Zdravevski

What’s next for Natural Gas prices

Today, the price of Natural Gas reached my $5 target, having halved from its (exuberant) $10 peak, only 2 months ago.

My series of posts commenced on June 7th, 2022 when I called Natural Gas the ‘mother of all peaks’.–5aP

In mid-late August 2022, I started to publish my views that the price of Henry Hub Natural gas would halve.

I warned of the risks chasing parabolic price moves in Natural Gas in this post.

On August 25th, 2022, 2 days following the peak and the original post, I made my $5 price target call and cryptically cited that it would have a negative affect of the stockmarket.

The S&P 500 closed at 4,199 on August 25th 2022. 

Today, the S&P 500 closed at 3,753.

Even after this week’s 4.7% advance, the S&P has declined 10.6% over the past 2 months.

Then, this next note was written when Natural Gas reached its half way point at $7.50

On Sept 23rd, (a month into this trade), I refined the timing of when I expect to see my $5 target reached.

I said, “I see $5 in Natural Gas being reached in the last days of October or into the first 10 days of November 2022.”

And this decline in Natural Gas (and pending moves across the energy complex) should have correlating effects to energy stocks and inflation, or rather deflationary effects.

In early September, I wrote about the correlation of the U.S. Natural Gas price with the Australian inflation rate

A few days ago, I added these comments along the same thinking.

And highlighted the massive declines amongst the previously rampaging ‘other’ gas prices.

Today, the price of Natural Gas reached my $5 target.

What’s next for the Natural Gas price?

I would expect a bounce over the next week or so before the weakness resumes.

Statistically, NG has declined for 8 weeks consecutive weeks. A streak that is hasn’t seen since for 10 years.

Natural Gas saw a 6 week declining streak in mid 2014 when it fell from $4.26 to $2.94.

A 7 week losing streak in 2010 and a 9 week streak of weekly declines in the 1st quarter of 2012.

Commodities, currencies, equities and bond yield seldom string together more than 7 consecutive weeks of one-way travel.

However, the downtrend across a few timeframes remains intact.

$4.76 – $4.80 is a major support for the Natural Gas price.

A decisive break below that, pending my other indicator work may increase probability of a visit of to $3.38 – $3.44 region.

$4.20 would be a more plausible bottom.

October 22, 2022

by Rob Zdravevski   

Gas prices halve, no surprise

Who would’ve thought that Gas prices could go down, let alone halve.

Well, the Dutch TTF Gas price has as has the Japan Korea LNG Marker (JKM) price.

It may seem perverse that this can happen but not really to others.

Henry Hub Natural Gas has nearly halved from its $10 peak.

Well, its currently $6 and nearing that $5 call I made in this note;

Market forces tend to fix extreme moves in prices.

October 18, 2022

by Rob Zdravevski

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

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