Is the Natural Gas Market Bearish Trend Over Yet?

In the latest edition of the Numbers Report, some compelling figures from the energy and metals sectors have emerged, giving insight into the current state of these industries.

1. Tesla’s stock price has seen a monumental 40% rebound, with investors showing renewed confidence in the company. Options investors are more bullish than they have been in over three years, believing there is still room for growth in Tesla’s valuation. The recent rally was sparked by better-than-expected quarterly vehicle deliveries, causing short sellers to lose $3.5 billion.

2. The US natural gas storage surplus to the 5-year average has seen a seven-week consecutive decline, dropping to 528 BCf by the end of June. Robust gas-fired power demand, coupled with production cuts, has been driving this trend, exacerbated by an exceptionally hot summer. Hedge funds have shifted to a net long position in Henry Hub futures after a bearish start to the year.

3. The ageing power grids in Europe and the Americas are facing challenges due to the increasing demand for generative AI data centers, putting a strain on the electricity systems. Europe’s power grid, averaging nearly 50 years, is the oldest globally, raising concerns about reliability and proximity to data centers.

4. China has launched a regulatory overhaul of the rare earth mining sector to alleviate pressure from high supplies. The new unified development plan aims to boost domestic production by restricting the use of imported ores by refineries.

5. US oil exports to Europe have dropped to a two-year low, driven by stronger WTI prices relative to Brent. The diminished profitability of cross-Atlantic trades has led to a decline in outflows to Europe, but a potential recovery is expected over the summer months.

6. While most base metals have seen a decline in value, tin has remained strong, with prices up over 30% since the beginning of the year. The positioning of hedge funds in tin contracts is the most bullish since 2018, signaling confidence in the metal’s future prospects.

7. The Labour Party’s resounding victory in the UK parliamentary elections could spell trouble for North Sea oil production and exploration. The new Prime Minister has pledged to end licensing in the North Sea, leading to major oil companies like Chevron and ExxonMobil divesting their assets in the region. Others may follow suit in response to the changing political landscape.