NATURAL GAS (HENRY HUB) ANALYSISClimate and storage knowledge key driversChinese language demand influential LNG FUNDAMENTAL BACK
NATURAL GAS (HENRY HUB) ANALYSIS
- Climate and storage knowledge key drivers
- Chinese language demand influential
LNG FUNDAMENTAL BACKDROP
LNG spot costs soared this week (+/- 10%) after colder than anticipated climate forecasts have been introduced. Many elements of the U.S. are experiencing their coldest climate this winter which can maintain the rising spot worth.
Tomorrow, the EIA weekly storage report will likely be launched which might stir further volatility main as much as and put up announcement. The chart under reveals the cyclical nature of storage all year long. Winter displays a depletion in shares as demand rises which naturally ends in a better LNG spot worth. This yr spot costs have remained comparatively subdued nevertheless, there may be an enchancment over final years costs with related storage figures.
EIA NATURAL GAS CHANGE (Bcf) vs HENRY HUB NATURAL GAS FUTURES PRICE
Chart ready by Warren Venketas,Refinitiv
The Chinese language have been on an importing binge of main commodities in 2021 which incorporates Liquefied Pure Fuel. This might doubtlessly replicate in storage knowledge tomorrow.
The rise in LNG importing seemingly commenced again in August 2020 and has progressively elevated as mirrored within the chart under (inexperienced). Not all areas have adopted this pattern because the Center East and North Africa (pink) have decreased their LNG imports from the U.S. albeit on a a lot smaller scale.
U.S. EXPORTS OF LNG DELIVERED BY REGION
Chart ready by Warren Venketas,Refinitiv
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NATURAL GAS TECHNICAL ANALYSIS
Pure Fuel weekly chart:
Chart ready by Warren Venketas, IG
Pure Fuel each day chart:
Chart ready by Warren Venketas, IG
The week began robust for LNG bulls as costs pushed above the November 2019 excessive (2.9225) however quickly retraced under. This resulted in yesterdays lengthy wick candle formation which is suggestive of worth rejection on the 2.9225 stage. The Relative Power Index (RSI) signifies present bullish momentum because the indicator sits above the 50 stage. This short-term sideways transfer will not be sufficient to substantiate a reversal in pattern because the medium-term pattern stays to the draw back.
The weekly chart could also be forming a rising wedge sample which might indicate a continuation of the medium-term downtrend ought to costs break under wedge help (yellow).
Bulls will proceed to focus on the two.9225 resistance with a subsequent push towards the three.0000 psychological stage.
The bearish perspective provides room towards the decrease rising wedge help trendline nevertheless, there could also be additional short-term upside to come back. 2.7805 could function preliminary help whereas the January swing low (2.5565) will observe ought to preliminary help be damaged – the two.5565 help stage will doubtless coincide with the rising wedge help trendline.
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Feb 03
( 16:02 GMT )
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Weekly Inventory Market Outlook
Key technical factors to contemplate:
- Rising wedge
- Resistance at 2.9225
- Assist at 2.7805
— Written by Warren Venketas for DailyFX.com
Contact and observe Warren on Twitter: @WVenketas