Natural Gas – Daily Analysis

Natural Gas is already in the middle of the first target area, down 8% after our weekend call on the bearish flag. The key question now is what comes next: continued downside, or early preparation for a reversal? With the July monthly close directly ahead, Natty is approaching an important technical decision point. The move also matters far beyond the chart. The lower U.S. Natural Gas goes, the stronger the incentive becomes for LNG exporters to move cargoes from the U.S. Gulf Coast to Europe. With the NG/TTF spread near $55/MWh, a modern LNG cargo from Corpus Christi to Northwest Europe could represent roughly $60–65 million of gross arbitrage value before costs. After liquefaction, freight, regasification, insurance, and other voyage-related expenses, the margin opportunity could still be in the $40–50 million area for a vertically integrated operator with access to capacity. That creates a powerful incentive behind the market structure….