As I wrote back on January 23rd, “This is somewhat unseasonal as most of the major lows in the natural gas market are generally not posted until March-April or even later in the calendar year during August-September. This is why some traders wonder if there’s still a lot more room to the downside?” Now, three weeks later, prices are still tumbling lower and may soon break multi-decade lows. Remember, the U.S. Energy Information Administration recently reported that gas held in underground storage in the contiguous 48 states was still over +3 trillion cubic feet—a high figure for midwinter and almost +20% above the level from this time last year. At the same time, the EIA is predicting dry natural-gas production in the U.S. will rise beyond last year’s record production by almost +3% in 2020. At the same time, we have the massive pressure of the coronavirus weighing on the entire energy market with hedge funds and other speculative investors the most bearish they have been on natural-gas prices since the financial crisis of 2008. Also, keep in mind, China is the second-largest LNG importer, and recently began rejecting and or delaying liquified natural gas shipments due to continuing concerns surrounding the coronavirus. As I mentioned a few weeks back, I would like to eventually get bullish this market but I’m in no major hurry at the moment. There’s a glut of supply, coronavirus headlines are still in play, the weather here in the U.S. seems mostly non-threatening, and it’s tough to envision exports ramping up aggressively anytime soon. Bottom line, I’ve got the natural gas market on my radar and am paying very close attention but still not interested in pulling the trigger as a bull. 

Leave a Reply

Your email address will not be published. Required fields are marked *