- During my daily analysis of the commodity markets, the first one of the markets that catches my attention is by far the natural gas market.
- After all, it’s not every day that it opens up and lodges directly in the air like it has. In fact, at one point during the day we were up an astonishing 20%!
All things being equal, it’s probably worth examining the fact that the main reason that we are seeing this is the fact that the Russians may not be able to send natural gas to the European Union.
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Keep in mind that the natural gas markets you are trading are most likely going to be related to the Henry Hub contract, so therefore it’s an American contract. Further compounding the idea of natural gas going higher is the fact that there is an arctic blast coming to the northeastern part of the United States, and I think that will of course attract a certain amount of attention.
European Union
This situation in the European Union is going to be a massive problem, and it means that the Europeans will be buying natural gas out of Louisiana. It’s very expensive to transport natural gas across the Atlantic Ocean, and of course the Europeans will have to get in line behind Asians who already buy natural gas from the Americans. In other words, we are about to see a massive squeeze as Vladimir Putin has found a major pain point for the Europeans in the middle of the winter. The Ukrainians seem less interested in allowing natural gas to flow from Russia into the EU through the pipes in that country now, which always I think had been a major problem just waiting to erupt. After all, it’s difficult to even fathom the idea that you would be at war with somebody you allow pipelines to send energy for your country with.
At this point, I think short-term pullbacks will continue to attract a certain amount of attention, but I also recognize that this is a market that is probably exacerbated by the lack of participants, so I would keep that in the back of your mind. Waiting for some type of value is probably the way to go forward.
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