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Natural Gas from Pipelines to PortfoliosNatural gas was once considered a byproduct of oil production. It is now becoming increasingly important as one of the cleanest burning fossil fuels and a key piece of the clean energy transition. Today, it forms the backbone of global energy production. This paper delves into the supply and demand factors affecting natural gas prices and proposes a long position in Henry Hub Natural Gas Futures (NG1!) to harness gains from seasonal price trends with an entry of 2.484 with a target of 3.099 and a stop loss at 2.172 delivering risk/reward ratio of 2x. Natural Gas Supply and Demand Supply Largest producers and exporters of Natural Gas are US, Russia, Iran, China, Canada, Qatar, Australia, Norway, and Saudi Arabia. The standout in the list is Russia. Following the conflict in Ukraine, gas exports from Russia plummeted 58% in 2022. This led to price shocks in EU natural gas (TTF). US supply is unable to adequately bridge this deficit as transporting natural gas using ships requires converting it to Liquified Natural Gas (LNG) and using special refrigerated vessels which is not economical for large quantities of natural gas. This is also why the spread between EU and US natural gas is much wider than EU and US oil. Notably, US shale reserves have a high concentration of natural gas. Along with newly developed fracking techniques, this has led to increasing gas production in the US. Moreover, natural gas is also obtained in the process of oil extraction, which means gas production is linked to oil production. This has interesting ramifications when looking at present supply. Despite low natural gas prices over the past few months, production in the US has remained high as a result of high oil production. Similarly, higher prices do not readily translate to higher production. This suggests that Natural Gas price-supply relationship is inelastic. Demand Demand for Natural Gas comes from: • Energy Production – Natural Gas is used in power plants to generate electricity. Natural Gas electricity production has been rising over the last decade as it replaces Coal. Notably, manufacturers using natural gas as an energy source can switch to other energy sources during price spike, which provides some elasticity to demand. • Commercial and Residential Heating – Natural Gas is used for heating homes in winter. This can lead to a seasonal demand during winter months in the Northern Hemisphere. • Industrial Use – Natural Gas is used as a raw material for industrial products such as plastics, ammonia, and methanol. Natural gas demand is heavily affected by weather. Unusually warm summers in the Northern Hemisphere drive higher energy usage from air conditioners while colder winters drive higher demand for heating. Inventories Gas can be injected into storage facilities and stored for later use. These inventory levels play a major role in balancing supply-demand. Summer months (April-October) are referred to as injection periods while winter months (November-March) are withdrawal periods. Inventory levels help even out the surge in winter demand. However, natural gas is much harder to store than oil as it is less dense. This means the inventory effect is not as apparent which explains the larger seasonal variation in natural gas prices as compared to oil prices. Seasonality in Natural Gas Prices Seasonal price action of Natural Gas shows two distinct price rallies. A large rally during winter in the US and EU driven by surge in supply for heating in winters, during this period, prices peak in early-December before declining. The other, smaller spike is during summers in the US and EU when demand for electricity rises, during this period, prices peak in early-June before declining. Further, prices show the highest deviation from the seasonal trend in late-September. Over the past five years, the winter rally has become wider, with prices staying elevated from August to early-December. Additionally, seasonal trend points to a price appreciation of +11% between September and December. However, investors should note that past seasonal trends are not representative of current or future market performance. Henry Hub Futures Henry Hub is the most prominent gas trading hub in the world. It is located at the intersection of major on-shore and off-shore production regions and connected by an extensive pipeline network. This is also where US natural gas exports are dispatched. CME’s benchmark Natural Gas futures (NG) deliver to Henry Hub and is the largest gas futures contract in the world. Other notable Natural Gas futures contracts are TTF (EU) and JKM (Asia). Futures from both regions are also available for trading on CME. Asset Managers are Bullish Commercial traders are heavily net short on Natural Gas futures, short positioning in July was at its highest level since 2021 but has since reduced. Overall, net short commercial positioning points to bullish sentiment. Asset managers have switched positioning in Natural Gas futures from net short to net long since May. Last week net long positioning reached its highest level since May 2022. Options markets OI points to a neutral market view on natural gas with Put/Call ratio close to 1. Options P/C has stayed close to 1 for the past 3 months. At the same time, Implied Volatility on Natural Gas options has been rising in August. A rally last week failed to break past a key support level but vols remain elevated suggesting that price may retest that level again. Henry Hub Gas Dynamics with European Gas Last week, EU Natural Gas futures (TTF1!) spiked by almost 28% due to a strike at Australia’s second largest LNG plant, still the rally soon retraced almost entirely. LNG supply disruption, especially at the key transition to the winter season can lead to volatility spikes. Though, EU gas inventories are 90% full, supply disruptions like this can still have a major effect on gas prices but especially on volatility. Over the past few years, higher flexibility and capacity in the global LNG supply chain has led to the various global natural gas benchmarks tracking each other more closely. This means that Henry Hub natural gas futures are exposed not just to US and Canada Natural Gas production but also to disruptions in global supply. However, the effect is comparatively limited due to ample supply in the US. This can be seen in the price action of Henry Hub natural gas futures which rose by 6% on the same day. Recent Trend in Natural Gas Inventories As per the EIA, Natural Gas supply fell 0.1% WoW last week. At the same time demand rose by 0.3% WoW. Note that working natural gas in underground storage has started to flatten over the past 4 weeks, rising by just 94 billion cubic feet (BCf) compared to the 5Y average increase of 140 BCf during the same period. Still, inventory levels are close to the top of their 5-year maximum, elevated by high US gas production during the summer driven by higher oil production. EIA forecasts that the depletion season will end with inventories 7% higher than their 5-year average. EIA expects production to remain flat for the remainder of the year, so watching weekly consumption reports could point to early indicators of seasonal inventory depletion. However, due to elevated inventory levels, the seasonal effect may not be as strong as prior years. In a longer-term trend, gas rigs in the US have started to decline this year after surging over the past year. This will likely lead to lower production over the next year. Trade Setup With options markets pointing bullish and seasonal trends suggesting price appreciation during this period, a long position in Natural Gas futures expiring in October (NGV) allows investors to benefit from an increase in Natural Gas prices. Each contract of CME Henry Hub Natural Gas Futures provide exposure to 10,000 MMBtu of Natural Gas while the October contract has maintenance margin of USD 5,070 for a long position. A USD 0.001 MMBtu change in quoted price per MMBtu leads to a PnL change of USD 10 in one Henry Hub Natural Gas Futures. Entry: 2.484 Target: 3.099 Stop Loss: 2.172 Profit at Target: USD 6,150 Loss at Stop: USD 3,120 Reward/Risk: 2x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NYMEX:NG1!Long
by mintdotfinance
17
FINNIFTY FUTURES - 240MINS TIME FRAMEThe Structure looks good to us, waiting for this instrument to correct and then give us these opportunities as shown on this instrument (Price Chart). Note: Its my view only and its for educational purpose only. Only who has got knowledge about this strategy, will understand what to be done on this setup. its purely based on my technical analysis only (strategies). we don't focus on the short term moves, we look for only for Bullish or Bearish Impulsive moves on the setups after a good price action is formed as per the strategy. we never get into corrective moves. because it will test our patience and also it will be a bullish or a bearish trap. and try trade the big moves. we do not get into bullish or bearish traps. We anticipate and get into only big bullish or bearish moves (Impulsive Moves). Just ride the Bullish or Bearish Impulsive Move. Learn & Know the Complete Market Cycle. Buy Low and Sell High Concept. Buy at Cheaper Price and Sell at Expensive Price. Keep it simple, keep it Unique. please keep your comments useful & respectful. Thanks for your support.... Tradelikemee Academy
NSE:FINNIFTY1!Short
by Tradelikemee
CORN rises off a pivot LONGCORN, the ETF tracking spot corn and corn futures has ended its down trend on the 15 minute chart. The pivot is not a surprise given the issues related to wheat in the Black Sea shipping with the Ukraine war escalating onto the sea and the grain export deal falling apart. The Price Momentum Oscillator which might be considered a leading indicator is showing bullish divergence.Volatility is steady and without spikes. The bias here is for bullish momentum to more forward with increasing amplitude given the fundamental geopolitical context. I will buy CORN long and may enter a position on the futures markets.
AMEX:CORNLong
by AwesomeAvani
1
8/4: Daily Recap, Outlook, and Trading PlanRecap As we've moved into August, we've seen a shift in the “character” of ES, with volatility returning and large, bi-directional swings in the market. Despite this, it's important to note that August is not a “bearish month” but rather a seasonally neutral month, with a +0.1% average over the last 20 years. The focus for this month will be on tactical, unbiased level to level day traders. Markets Overnight 🌏 Asia: Up 🌍 Europe: Down a bit 🌎 US Index Futures: Up a bit 🛢 Crude Oil: Up a bit 💵 Dollar: Down 🧐 Yields: Down 🔮 Crypto: Up slightly World Headlines Bond market showing early sign of stabilizing. Key Structures The core pattern containing the entire consolidation since the July 19th high was a broadening formation, which broke down on Wednesday. This pattern suggests that bears control below and bulls control above. Other key structures include the rising support trendline of the purple ascending triangle and the large rising uptrend channel in white. Support Levels Key support levels include 4525, 4517, 4509, 4493, 4487, 4476, 4464, 4448, 4441, 4428, 4411, 4395-4400, 4382, and 4376. Resistance Levels Resistance levels to watch are 4534, 4542, 4550-53, 4560, 4565, 4577-80, 4583, 4592, 4599, 4607-09, 4618, 4623, 4630, 4639, 4650, 4661, and 4671. Trading Plan For today, the short-term bull case depends on the 4509 level continuing to hold. The bear case begins if the 4509 level fails. As always, it's important to plan your zones of engagement in advance, wait for entry setup, take a level to level piece, then reset bias from scratch, and get to the sidelines. Wrap Up With the return of volatility, August is shaping up to be an interesting month for traders. Key levels and structures have been identified for both bull and bear scenarios, and as always, the focus should be on tactical, unbiased level to level trading. With Apple earnings expected to introduce some volatility into the market, it will be important to stay reactive and flexible in your trading approach. Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
CME_MINI:ES1!
by spytradingpro
8/1: Daily Recap, Outlook, and Trading PlanRecap ES continues its characteristic bull market cycle of multi-day squeezes followed by wide rangebound consolidation under resistance, as it has done since July 19th. This pattern is expected to continue until a breakout occurs. Markets Overnight 🌏 Asia: Down a bit 🌍 Europe: Down 🌎 US Index Futures: Down 🛢 Crude Oil: Down 💵 Dollar: Up 🧐 Yields: Up strongly 🔮 Crypto: Down World Headlines Manufacturing data weak across China and Eurozone with Germany showing the steepest decline since the pandemic. Key Structures The triangle at 4609 remains the key structure, despite being somewhat "busted". This level has been tested six times in the last week and is proving to be a strong resistance. The ascending triangle at 4569-4571 is now support. The large rising uptrend channel connecting the March lows and the May lows is the primary medium term channel, with support currently at 4405 and resistance at 4650-55. Support Levels Supports are at 4608, 4602, 4594-92 (major), 4580, 4568-71 (major), 4556, 4549 (major), 4542, 4530 (major), 4515, 4500, 4488-92 (major), 4474, 4467, 4455-60 (major), 4442-45 (major). Resistance Levels Resistances are at 4608 (major), 4617, 4622 (major), 4631 (major), 4641, 4652-55 (major), 4664, 4670, 4681-84 (major), 4697, 4705 (major), 4714, 4722, 4740-45 (major), 4751, 4762 (major). Trading Plan The bull case is in play above 4592 and 4600, with a potential breakout to 4622 and then up to 4652-55. The bear case begins on the fail of 4592, with a potential short at 4589 for a move down the levels. If 4592 fails, it's time to short. Wrap Up ES continues to consolidate and build its base. As long as 4600 holds, with any spikes down to 4592 quickly bought, ES can continue to base for a push to 4622, then a final dip, then a breakout up the levels to 4631, then the 4655 magnet. If 4592 fails, it's time to short. Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
CME_MINI:ES1!
by spytradingpro
DCA bot and my experience with it!Hey there, fellow crypto enthusiasts! Welcome to my blog, where we break down the complex trading world into bite-sized knowledge nuggets. Today we're diving headfirst into the exciting strategy of Dollar Cost Averaging (DCA) and how it works with trading bots. Dollar Cost Averaging Demystified Alright, folks, let me break it down for ya. Dollar Cost Averaging (DCA) is an investment strategy that's all about taking it slow and steady. Instead of going all-in at once, DCA has you regularly buying a particular asset, like bitcoin, in small chunks over time. It's like sipping your favorite beverage gradually instead of chugging it down in one go. We want to savor those gains, people! Smooth Sailing through Market Turbulence Here's the kicker, my friends. DCA helps you ride out the crazy rollercoaster of price fluctuations. Picture this: Bitcoin's price takes a nosedive. Ouch, right? But fear not! With DCA, you're buying during the dip, baby! So when the price inevitably bounces back up, you'll sit pretty and reap the rewards. On the flip side, if the price skyrockets, well, you might have some losses when it takes a breather. But fear not again! Since you're investing small amounts regularly, you're not putting all your hard-earned cash at risk. It's like having a financial safety net during those market downswings. Sweet, isn't it? What figures and patterns do I recommend using? Firstly as a continuation pattern, I would like to search for a triangle, flags, and wedge. Also, you can catch the price squeeze and the volume spike to catch the volatility on it. For example, the last setup of that pattern was on $Matic. How I automated trading with the DCA strategy I try to be smart with my time, and after figuring out how DCA works, I regularly practice automation using this strategy. Here are my tips and personal configurations: so, if you want to trade with small leverage, 3x-6x will be enough for you. The maximum risk is 10x. Try to make simple trades, and think about trends at the beginning of your charts. And then you will start to win. Here are the results of trading with the DCA Futures bot As you can see, it's possible to make money with bots. However, it requires understanding of how they work and knowledge of coin analysis. The case is that you free up your time for other things. Also, note that my advice is not a call to action. Everyone is responsible for their own trading decisions. Questions: New trading strategies. Do I analyze myself with VSA indicators, like BOS? ( Break out structure) I often use wedge and triangle patterns with significant consolidations in my work. Once I identify these patterns, I wait for a push of the price increase resulting from the liquidity and then activate my trading bots. This way, I actively participate in the market and observe how my strategies perform. Are you interested in learning more about the settings you can use with the DCA BOT? I'll be happy to share that information with you next time. Hang tight for more mind-blowing posts where I uncover various investment strategies and financial wizardry to help you conquer your financial dreams. I wish you successful trades!
WEducation
by Ingwina
Higher upside or Bull trap?Yesterday we spoke about the Dollar weakness and how that will affect the equities markets. As expected due to the strength of a weak dollar 😉 NQ broke the Highs it had stablished on the Hourly timeframe a $15432.00. The one thing we spoke about and speculated we would see today did not become a reality. We were expecting once the highs were breached for price to retrace and possibly target Hourly Lows. We did get a nice retracement to $15342 and an unexpected bounce reaching to take out the newly created Hourly highs. What was I expecting you ask? Well it was a bit ambitious since I wanted to take out the highs and target the lows right away, LOL. But this can happen all depending on the Dollar strength or weakness for that matter. Momentum should carry price at least above $15507 with potential to target 15561 depending on PA (price action) ay considerable rejection at these levels I expect to see price return t $15359. Keep your eyes on the Dollar
CME_MINI:NQ1!Long
by JP_Tru
XAUUSD: Gold touches multi-week high!The XAU/USD daily chart indicates that it is holding onto small gains above a steady 20 Simple Moving Average (SMA), while a stable 100 SMA is positioned around 1,950. Additionally, the technical indicators are gradually rising and putting pressure on their midlines. Although it doesn't seem likely for another upward movement, it does reduce the chances of a decline in the near future. In the 4-hour chart, technical analysis shows that XAU/USD encountered selling pressure when it approached the bearish 200 Simple Moving Average (SMA), but it remains above the shorter moving averages. The 20 SMA is below the bearish 100 SMA, indicating that buyers are not particularly strong. Furthermore, the technical indicators are retreating from overbought levels, but they still remain in positive territory, suggesting that a significant decline is not imminent. Support levels: 1,924.35 1,910.05 1,898.10 Resistance levels: 1,945.20 1,958.75 1,967.90
FX:XAUUSDLong
by Sphyn-Trader
4