Natural Gas - The Girl Who Hopes You Remember HerSince the end of February, and more accurately mid-March, the volatility on Natural Gas has all but disappeared.
This is a good thing if you're bullish, because it's both consolidation and indicates accumulation.
It's also a good thing from a sentiment/narrative perspective because everyone has all but forgotten trying to gamble on BOIL.
Moreover, it's strange for Natural Gas to trade so cheaply in light of the situation with the conflict between NATO and Vladimir Putin and how it impacts both China and Xi Jinping and Europe.
I've said in many of my previous natural gas calls that $10 wasn't the top. And if that supposition is true, the fact that we're trading at such an enormous discount for so long is really notable.
Just look how big the discount is on the monthly:
One of the core tenants of 2023's thus far price action being a likely bottom is that Natty has swept out the $2 mark twice, the last time in April.
Since, it's then made a series of higher lows and now looks certain to make higher highs.
Moreover, on the weekly we see any red bars are continually traded through to the upside by the MM.
All of this comes while the algorithm has been playing around the December of 2020 monthly pivot.
The fact that $2 has been protected so strictly and that the high of the year was set at only $3, which it touched for only a day, a Friday, to start March tells us that the target is more likely to be up than it is to be down.
It is very hard for me to tell you if Natty is going to do $3.2, $3.5, $4, or $4.5. It may just double top at $3 and then go back to $1.8.
What I can say is that getting over $4 ought to have a high degree of resistance. However, if the algs push it through, it's going to take off and take off in a hurry.
One thing that is true is that you really should not be bearish on energy.
I also believe that the Nasdaq in specific is about to correct so violently that it's going to set a new low.
We may be in a scenario right now where we see something like:
Equities correct
USD up
Energy up
Metals up
10Y yield up
VIX up
Instead of the usual everything down and everything up all at once shenanigans.
The world is running out of energy. Oil is not a bear market.
Worldwide and US production peaked in 2018 and hasn't come back.
A lot of the "oil" that is included in daily production numbers isn't actually crude oil but is "natural gas liquids" and other lesser substances.
In a climate where mankind is using more and more electricity and temperatures are getting hotter and hotter, there is no reason to believe that natural gas should stay this cheap.
How hot will July, August, and September be in North America?
Natural gas _is_ electricity. It's also plastics. It's also what the places that get winter use to fuel their furnaces to stay alive.
Are you really expecting $1.50?
