- During my daily analysis of commodity markets, the first market that catches my attention is by far the natural gas market.
- After all, it’s not every day that it opens up and sits directly in the air like it has. In fact, at one point during the day we were up a whopping 20%!
All things being equal, it’s probably worth examining the fact that the main reason we’re seeing this is because the Russians may not be able to send natural gas to the European Union.
Note that the natural gas markets you are trading will most likely be linked to the Henry Hub contract, so it is a US contract. Further complicating the idea of increasing natural gas is the fact that the arctic blast is coming to the northeastern part of the United States, and I think that will naturally attract some attention.
European Union
This situation in the European Union will be a big problem, and it means that Europeans will buy natural gas from Louisiana. It is very expensive to transport natural gas across the Atlantic Ocean, and of course the Europeans will have to fall in line behind the Asians who already buy natural gas from the Americans. In other words, we’re about to see massive pressure because Vladimir Putin has found a major pain point for the Europeans in the middle of winter. The Ukrainians seem less interested in allowing natural gas to flow from Russia to the EU through pipelines in that country now, which has always been, in my opinion, a big problem just waiting to erupt. After all, it’s hard to even imagine the idea of being at war with someone you allow pipelines to send energy to your country.
At this point, I think the 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 a lack of participants, so I’d keep that in the back of your mind. Waiting for some kind of value is probably the way to go.
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