The daily chart also indicates that buyers have a clear shot at main tops coming in at $3.377 and $3.418. Taking out these levels will reaffirm the uptrend, but headwinds still linger at the intermediate 50% level at $3.465. Not only is this support, but it’s also the trigger point for an acceleration to the upside with the 200-day moving average at $3.611 and the long-term pivot at $3.700 the next major targets.
Make sure you define your trading objectives. If you’re looking for short-term entertainment then stick with the August or September futures contracts. They will primarily be driven by short-term weather changes. If you’re looking for a long-term move with no worries about monthly rollovers, then trade the December to March futures contracts.
The scenario for a bullish long-term move involves hot weather and increasing LNG demand depleting the U.S. gas in storage. This would lead to much lower supplies at the start of the winter heating season. At least that’s my plan.
Europe’s Storage Gap Puts U.S. LNG in Play
European natural gas prices hit a three-week high on Tuesday after the attack on a Qatari LNG carrier in the Strait of Hormuz reopened the question of how reliably Persian Gulf cargoes can reach European buyers. European storage facilities were only about 50% full as of July 4 against a five-year seasonal average of 65%. That deficit is wide enough that any interruption to Middle Eastern LNG sends European utilities looking for U.S. cargoes to fill the gap before winter.
Ras Laffan is the reason the Hormuz attack hit European pricing as hard as it did. Qatar said earlier this year that attacks damaged roughly 17% of the facility’s LNG export capacity. Repairs are expected to take three to five years. The facility handles about 20% of global liquefied natural gas supply and the damage predates Tuesday’s incident. One Qatari tanker getting hit near the Strait is a headline. A 17% capacity reduction at the world’s largest LNG hub lasting half a decade is the story European buyers were already trading before Tuesday morning.
LNG feedgas deliveries to U.S. export terminals totaled 18.1 billion cubic feet per day on Tuesday, down 7.6% from the prior week. European utilities are trying to replace Qatari cargoes while rebuilding storage from 50% to something defensible before winter. That means bidding for U.S. gas. That pulls molecules off the domestic market and onto tankers, and the storage surplus that is keeping the bears comfortable right now starts shrinking.
Source: Original Article
