Natural Gas: Is a Bottom in Sight?
Michele Schneider | May 03, 2024 02:28AM ET
A big story last week was that AI is fueled by natural gas, which should increase demand.
That story did little for the futures price.
Then this week other stories came out that:
- Prices were supported by higher feed gas flows to Freeport LNG and lower U.S. production.
- Chesapeake Energy (NYSE:CHK) decides to maintain output curtailments.
- Com says that a hot forecast for Texas could also lift demand for power generation.
We also just learned that the weekly build in inventories came in roughly in line with expectations which was received with a rise in prices as of today.
Year-to-date, natural gas prices are down nearly 40%.
Analysts believe that solar will replace the need for natgas, but can the US power grid sustain the growth in demand?
After all, good or smart business generally goes the way of the cheapest fix, and not necessarily the one that is better ecologically.
Be that as it may, it’s the charts that keep us on the ride side.
Let’s have a look.
On the futures chart, June contract, the answer looks simple.
Wait for 2 closes over the 50-DMA and the phase change to recuperation will confirm.
The ETF UNG is another option to watch, however, as I have noted many times before, the underlying commodity should drive investment decisions.
In the chart, we see consistency in that UNG has yet to clear the 50-DMA to a better phase.
What I find interesting here is that our real motion indicator has a bullish diversion with price over the 50-DMA.
Plus, our leadership indicator at this point shows UNG trading on par with the benchmark.
ETF Summary
- S&P 500 (SPY) Still in a caution phase-500 now support 511 the 50-DMA resistance
- Russell 2000 (IWM) Still in a caution phase-190 support 200-202 resistance
- Dow (DIA) Still in a caution phase 380 support 388 resistance
- Nasdaq (QQQ) Still in a caution phase 430 pivotal
- Regional banks (KRE) 45-50 range
- Semiconductors (SMH) Still in a caution phase 204 Support 220 resistance
- Transportation (IYT) 63 support 67 resistance
- *Biotechnology (IBB) Unconfirmed from bearish to recuperation phase
- Retail (XRT) 71.50 support 75 resistance
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 76.50 pivotal
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