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Natgas

The Bogeyman in Futures TradingNYMEX: Dutch Natural Gas ( NYMEX:TTF1! ), Henry Hub Natural Gas ( NYMEX:NG1! ) and WTI Crude Oil ( NYMEX:CL1! ) Amid a deep energy crisis faced by Europe, Dutch natural gas futures hit a new record of €350 per megawatt hour in August. Governments across the European Union adopted new rules to reduce electricity usage. In just two months, with a dramatic turn of events, natural gas prices in both Europe and the U.S. dipped below zero last week. TTF Next Hour Contract, which reflects real-time European market conditions, fell to -€15.78 on Monday, October 24th. The Waha index — a main indicator of natural gas supplies in the Permian Basin in West Texas, dropped to -54¢/mmBtu on the same day. What has made the highly sought-after energy source worthless? Europe: LNG Overflow and Insufficient Storage TTF contracts are for physical delivery of natural gas through the transfer of rights at the Title Transfer Facility (TTF) Virtual Trading Point, operated by Gasunie Transport Services (GTS), the transmission system operator in the Netherlands. Due to sanctions on Russia, European countries have been buying natural gas globally to prepare for peak winter consumption and asked the public to conserve energy. With increase in gas supply and decrease in gas usage, their efforts paid off. The average gas storage level in the EU has reached 93.4% of capacity, and the storage level in Germany has reached 97.5%. In addition to near-full storage levels, many LNG tankers are heading to Europe. According to Marine Traffic, out of the 641 liquefied natural gas (LNG) carriers in operation worldwide, sixty are already in the north-west Europe, the Mediterranean Sea, and the Iberian Peninsula. Many LNG ships sit idly outside of ports because they cannot be unloaded. Clarksons Securities estimated that the voyage cost of an LNG carrier runs between $276,700 to $313,000 per day. This amounts to $8.3 - $9.4 million a month. In order to stop the bleeding, sellers are so desperate that they would pay someone to take over the shipment. US: Overloaded Pipelines Due to Planned Repairs Waha Index Futures is based upon the mathematical result of subtracting the monthly price published by Inside FERC from the average of the daily prices published by Gas Daily. Permian gas is produced mainly in the form of associated gas, a by-product from crude oil drilling. Crude production from the prolific basin has hit record highs this year, topping 5.4 million barrels per day in October, according to the Energy Information Administration (EIA). Natural gas pipelines in the Permian Basin of West Texas cannot operate normally as they are already fully loaded, and natural gas can only be stockpiled in the Permian Basin. Planned repairs on Kinder Morgan's Gulf Coast Express (GCX) pipeline appear to be the tipping point for the negative prices. Flows on GCX were cut by 38% through October 28th. The constraints forced Permian producers to sell gas at wider discounts to the US benchmark, Henry Hub. Spot prices turned negative on October 24th, meaning sellers have to pay buyers to move the gas. Bogeyman in Physical Delivery Specifications for futures contracts are very specific (hence the name). Exchanges strive to include all possible scenarios in contract design. With respect to the most important features, namely, the grade of the underlying commodity and the methods of trade settlement, no alternations are allowed unless they are specifically spelled out in the Rules Book. Both TTF and Waha reflect spot prices of natural gas physically delivered to the contract-specified locations. These designs worked well at normal times. However, under extreme conditions, sellers could not make delivery due to insufficient storage or overloaded pipelines. Negative pricing is the bogeyman in TTF and Waha. This bizarre phenomenon is a lesser evil for sellers, who have to choose between taking a known loss and potentially bigger exposure with holding unfulfilled financial obligations. How did we get here? In recent years, as developed countries are fully committed to combatting global warming, new investments are flowing into renewable energy, and away from traditional fossil fuel such as oil, gas and coal. As a result, gas pipelines and storage facilities are underfunded and lacking maintenance and upgrades. This year’s geopolitical crisis exposed the risk of getting rid of “dirty energy” too soon before clean energy picks up its pace. TTF Next Hour contract serves as a risk management tool for high-frequency gas traders. The benchmark for European natural gas is actually the TTF Calendar Month Futures. It never turned negative and is quoted at €139 on October 28th. The benchmark for US natural gas is not Waha Index, but NYMEX Henry Hub (NG). It peaked at $9.70/MMBtu in August and is trading at $5.625 on October 30th. Remember the Negative Oil Prices? On April 20, 2020, the front-month May 2020 WTI crude contract ( NYMEX:CL1! ) dropped by 306%, or $55.90, for the session, to settle at negative $37.63 a barrel on the New York Mercantile Exchange. WTI first came to the market in 1983. It was the most successful futures contract in the history of NYMEX. Each contract calls for physical delivery of 1,000 barrels of crude oil at any storage facility in Cushing, Oklahoma. In the next 30+ years, the exponential growth in WTI trading has outgrown the capacity in Cushing. In April 2020, all storage facilities eligible to take delivery were completely full. Sellers had to pay buyers to take the crude oil shipment off their hands. That was the first time a futures contract closed at a negative value. We could see the same bogeyman at play in TTF and Waha. How to Avoid Getting Caught in Negative Prices Unless you are a commercial trader who could make delivery, take delivery, and store shipment, it is highly risky to hold any open positions (long or short) during a contract expiration month. Futures contracts have two methods of final settlement – physical delivery and cash settlement. All financial futures are cash settled. These include equity indexes, interest rates, foreign exchange, and cryptocurrency futures. Commodities futures, including energy, metals, and agricultural commodities, are a mixed bag. They were all deliverable contracts at the beginning. Newer contracts have adopted cash settlement with the help of cash price index, such as CME Lean Hog Futures. Despite the methods of delivery, be it physical delivery or cash settlement, closing out the positions before expiration month is a prudent strategy. Doing so will also avoid getting caught in the depletion of liquidity. Commodity market liquidity is usually rolled over to the next contract month well before expiration date. Happy trick-or-treating ! *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
NYMEX:NG1!Long
by JimHuangChicago
11
Oct 27,22-NG Winner AGAIN-700 pt profitThis week is a good week!! Last night I closed out my 5.5 Buy Order for another 700 point profit (officially 695 point profit) to close at 6.2 (officially 6.195). Next up is my Buy Order at 6 which currently is in profit territory. The storage report is today so we shall see what happens. I might get out of my position with a small profit. Not sure. Then there is still my Buy Order at 7, where I was a little early (ok a LOT early) with my bullish prediction. Should be an interesting finish to this year. Stay safe all and trade smart. Heiko
NYMEX:NG1!Long
by HEIKOTradingSystem
NATURAL GAS - NatGas - shortAs said before the "pausa" for Pull Back .. this is not an easy trade. All the world think about an increase of energetics price for the winter but based on technical point in this moment we cannot confirm that. The pull back .. until this moment was really short.. without "energy" .. and arrived only to 0,38 of thirt wave.. this let me to think that probably the short momentum is not completed. Before I wrote and now confirm that: 1) COT report say that non commercial are short (with increase) 2) Europe has completed the "stock" for this winter 3) Europe has created a big plan to reduce the electricity consumption 4) USA has a short possibilities for increase the natural gas export at least for the next one mounths 5) The petroil cost are decrease and could be more convenient that GAS --- From TA we have still on going the big H&S and a little bit H&S in this last movement.. so all this with technical wave analysis suggest a short continuation ... Stop Over the 7,2$ Trade safe.. always
NShort
by flyhorse
Oct 25,22-NG-FINALLY price is going up :-)In looking at the chart, you can see how price dropped quite a bit outside the Linear Regression Indicator but price is on it's way back up. Yesterday was the first day in a long time of positive gains, hopefully going to finish the week off in green territory. As previously discussed, I put another Buy Order in at 5, which is now in profit so that's good. Just waiting for price to continue skyrocketing. FYI - price will probably NOT skyrocket up to 10 or anything, but will very slowly make it's way up there over the winter. So this could be a 4 month grind, so get your Big Boy Pants on and strap in for a crazy ride - between the War, Recession, Sky high interest rates and Bankruptcies (more to come over the next 6-12 months) it's going to be a crazy 2023!! Stay safe! Heiko
NYMEX:NG1!Long
by HEIKOTradingSystem
2
NATGAS // officially in a short trend on the weeklyNATGAS closed below the starting point of the last impulse wave up, meaning the trend has turned on the weekly chart as well. This short trend is valid until the brown validity zone is taken back by the buyers. Any move up is only a correction of the south impulse wave, and a break of this countertrend makes the price fall. Of course, it can go on falling, but a countertrend may come soon. Trade safe! ⚪️⚫️ -------------------------------------------------------------------------------- ANYWAY, a lot of Qs about the direction of the price. But it doesn't matter. WE JUST REACT! Remember that trading is a business. SIZE your TRADES according to your risk aversion! ----------------------------------------------------------
CAPITALCOM:NATURALGASShort
by TheMarketFlow
NATURAL GAS: HUGE OPPORTUNITYHi guys, following my recent analysis on silver, i'm looking also at Natgas. In my opinion this winter we'll see many problem in Europe and if governments try to save many countries, we'll see the price fall but then rise in the coming months, just after this winter. Why? Well governments will try to save countries in the short term "printing money" (i mean with interest rate, qe, etc) but then they will be forced to did a step back pushing the price up. Europe need gas, it's improbable to not see the price go up. Be prepared and let's see.
PEPPERSTONE:NATGAS
by yellow_ag
Natural Gas / NG - It's Officially a Bear. Now, Hold My BeerThis post is a continuation of a previous post, which is based on a longer-term analysis: Natural Gas / NG - What, Truly, Is a Bull? With Wednesday-Friday and Monday morning's long-awaited dump into the fabled double bottom around $7.4, natural gas can only be considered to have formally shifted into a bearish market structure, based on both the 4H and Daily candles. Note that the dump also breached range equilibrium. What this means, is that it's finally time to look for a 45-day short play on natural gas. Remember, Freeport is supposed to re-open for export to Europe in mid-November, so in principle you'd want to see the downside manipulation occur before then. However, all this time, big firms have been shipping U.S. natural gas via boat to Europe, and making more than $100 million a shipment in the process . Demand has been so enormous that there aren't enough ships on the planet available to meet it. So it's not that U.S. Henry Hub pricing hasn't reflected the demand problem caused by Europe shooting itself in the knees trying to spite Putin and Russia so it can fit in with cool kids in the Globalist Bloc. It has. It's just that the reality is, no matter the news and how it's framed, an energy crisis is coming to North America too. You just won't see it until inflation starts to dip. Energy prices have to come down for inflation to dip. Once inflation dips, it will rip again, because it hasn't topped yet. Anyone who says inflation has peaked obviously can't read The Diagram, and nobody who is unable to read The Diagram is worthy of being a Doctor. Regarding price action, once something as turbulent as natural gas dumps, and dumps a lot, and takes out key pivots, you have to be careful. At present the market makers are still employing these patterns where they seek and destroy to the downside and then quickly seek and destroy the upside. It's very hard to catch a truly trending market at the moment, and so you have to employ a surgical strike style of trading and positioning rather than trying to get long or get short and rack up the Sklansky Bucks comfortably. For example, the stock indexes look like they're going to bounce, and probably hard, before the next big leg down, regardless of what comes out of Wednesday's FOMC: SPX500 / ES - It's Still a Bull. Now, Good Luck Riding It With natural gas, what I'm really looking for here to position puts for November is a bounce into the $8.9 range. The problem is, the natural gas market makers are not so polite. They don't want you along for their ride. It's their ride, and if you're good enough to figure it out, you can make money. But if you can't, they will buck you off and you can watch from the sidelines. They're a lot like angry cowboys, and so there is a possibility that is far from negligible that a number like $9.6 prints again before we see the next move down. Or at least a number that starts with $9. Regardless, in my opinion, once this bear is finished growling and knocking over trees, we will actually begin to see trending markets again. They won't trend for all that long, but you won't get bounces this time. It'll just landslide or gap down to where it wants to go and collect all the badly positioned longs or the longs who somehow never took profit during a run to $10. WTI Oil, likewise, is in the same boat. WTI Crude / CL - An Intervention: Saving Blind Bulls Although its price pattern is more notable in that it once again traded back to the $81 gap and bounced again. If it runs the $91 double top it left behind and keeps going up, it might just be a bull run again. But if it just crushes $91 and starts to fall, you can surely expect numbers like $69 and $50 are en route, no matter what the fundamentals say about global demand. What you're ultimately looking at with the positioning of the markets, whether it be copper, soybeans, stocks, is you're looking at first some bouncing and then what is likely a market-wide sell off with some days of panic that is simultaneously subdued and overexaggerated. All of which is designed to have you sell low and then buy back higher with half your account left intact. Consider that last week's CPI dump took 200 points from the SPX in a few hours, but only raised the VIX by like 3 points. VIX 28 is now a ceiling. VIX 40-42 will be where you find the bottoms. VIX 72 will come when the markets truly start to head to the downside. After the global avalanche is finished, you'll likely see the Nasdaq be extremely strong for a few months. SPX will be okay, but will be drug down by energy companies, which won't do particularly well because they'll be drug down by natural gas and WTI accumulating at low prices. Dow will probably be better than SPX but worse than Nasdaq on account of its defense contractors likewise accumulating at low prices. Once retail is done gorging themselves stupid on $30 SNAP and $45 BBBY and $198 AAPL, reality will unfold. Stocks will crash, hard. WTI and Natural Gas and other commodities (Except for silver and gold. Seriously. Quit being a moonboy on ancap stuff. It'll rot your teeth.) will make major new highs and energy companies and defense contractors will become the safe haven in the markets. When those days unfold, you can expect major geopolitical turbulence, which can include as much as the collapse of the Chinese Communist Party. You can also see significant natural and manmade disasters unfold. It won't be a pleasant time. But you should know that what unfolds will appear chaotic but actually be orderly. Everything unfolding in the world is orderly and well arranged. This world will not be destroyed, although there will be significant hardship for many regions, and few will find the outcome comfortable. But for now, you can focus on trying to make money. You have the difficult task of trying to find a time to short natural gas inside of a 15% possible range. You can short $8.9, but they really might take that $9.3 pivot. If you wait for the $9.3 pivot, you might not get filled and miss the move. This kind of move back up is also designed to dump the ETFs, many of which trade on 2x leverage (10% natural gas move = 20% ETF dump), so big pockets can get fat long for the real dump. It's very annoying. They're really very annoying about how they do things. It's a constant gut check and a series of difficult and suboptimal circumstances, because time is an excellent weapon and they use it very well. You should know that all the decisions you face when trading and all the loss and gain you come across are actually opportunities to cultivate your mind and your heart. They're chances to improve. Every thought and feeling you have while doing this is you forging yourself like quicksilver being refined inside of a crucible powered by burning hydrogen. Everything depends on how you improve your heart and employ your rationality. Fear and greed are your greatest enemies.
NYMEX:NG1!
by LordWrymouth
8
Oct 19,22-NG down to 5.5-going all in BUYSo price action has continued to fall and I'm leveraged a bit now. I put in another Buy order at 5.5 wondering if tomorrow is the day when price action rebounds because of the storage report. Who knows - it's anyones guess. Price might fall down to 5, I dunno. But if it rebounds tomorrow, I'll be in good shape. Price has continued to fall because of warmer than expected weather across the U.S. throughout Oct and into the beginning of Nov. As soon as that first cold snap comes, I will be sitting pretty to take advantage. Stay safe all. Heiko
NYMEX:NG1!Long
by HEIKOTradingSystem
11
WTI oil - Deteriorating demand to weight on the higher oil priceSince our short-term price target of 80 USD was taken out a few weeks ago, we abstained from setting short and medium-term price targets because of very high volatility in the oil market. Despite that, we stuck to the long-term price target of 70 USD, to which we remain committed. Our views are based mainly on fundamental factors concerning the deteriorating global demand for oil, with the OPEC slashing demand for 2023 and China maintaining its zero covid policy for longer. Technical analysis - daily time frame RSI and Stochastic are bearish. MACD is neutral. DM+ and DM- strive to perform a bearish crossover. Overall, the daily time frame is neutral/slightly bearish. Illustration 1.01 Illustration 1.01 shows the daily chart of USOIL and two simple moving averages. Yellow arrows hint at bullish breakouts (above SMAs) and subsequent invalidation. Technical analysis - weekly time frame RSI and MACD are bearish. Stochastic is bullish. DM+ and DM- are bearish. Overall, the weekly time frame is bearish. Illustration 1.02 The picture shows the weekly chart of USOIL and two moving averages. The yellow arrow points to the impending bearish crossover between two SMAs; if successful, it will bolster the bearish case. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
TVC:USOILShort
by Tradersweekly
22
Oct 17,22-NG Put in a Buy Order @ 6So price action has dropped like crazy for NG...I still have my Buy order at 7 so I added another Buy order at 6. I think the lowest price will go will be around 5.5. I will put another Buy Order in at 5.5 if it gets that low, otherwise I will ride the price action back up to infinity and beyond! ok....maybe just to 10 or so. Anyway, stay safe everyone - as you can see, price action is now OUTSIDE the Linerar Regression Indicator so price should be going up any week now. Not to mention the War and the Winter and Euro and Asian NG prices skyrocketing...anyway. Heiko
NYMEX:NG1!Long
by HEIKOTradingSystem
2