Natural Gas on the Nymex had a volatile week before closing 0.8% higher than the previous one at $3.51. EIA reported on Thursday a build of 79 Bcf in working underground stocks for the week ended October 27. Total inventory is currently at 3,445 Bcf, 8.4% higher y/y, 5.7% above the 5-year average. The refill season is being prolonged as we have anticipated.
The market gave us another healthy buying opportunity in this uptrend on the near-term charts for the December contract and we now need to anticipate the seasonal ceiling for the winter contracts ahead. Are we going to see a $4.50 ceiling as we have been anticipating since May? Probably yes but Put options for later in spring must now be also placed on time. We want to continue buying any dip coming our way for another month but the pace of reduction in the beginning of the withdrawal season will tell us more about the winter. I believe that range-bound behavior will offer trading opportunities and hedging activity for the next couple of months on the near-term charts. The direction remains for a $4.25 February contract, but we must proceed with caution from now on. The uptrend will soon lose its steam.
The situation in Israel seems to be getting worse. Europe may have, for the time being, sufficient natural gas reserves for the winter, but already large volumes from Israel to Europe via Egypt have been cut off. Qatar and the United States are now acting as the good cavalry to Europe’s rescue as Russian gas flows only to the East. I don’t know if the above should be a concern for Europe more than for the U.S strategically. However, for free Western societies it does not seem to be very flattering. As I’ve written in the past regarding Putin’s invasion of Ukraine, natural gas is receiving yet another form of defamation globally. Those who respect themselves, some Europeans and Americans still do, will think about a faster energy transition very soon. Without the methane we once counted on. I want to emphasize something that has rarely been said in the last two years. LNG with the current carbon capture technology is the worst form of natural gas. By far. The most harmful to the environment. Some governments will start digging for lignite again. If they are to pollute the planet for a few more years, at least they don’t need countries and trading offices that don’t respect freedom, acting as their brokers. In some regions of the world, mainly in Europe and America, some governments are still accountable to their taxpayers and voters.
Natural Gas pricing should be fair. Nuclear and Renewables are looking very strong. The domestic gas-fired electricity generation market share is the one that have to be preserved. U.S. macro data and the Dollar against majors must be routinely monitored. Daily, 4hour, 15min MACD and RSI are pointing to entry areas. 
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