Three Charts on Energy - Jan 23rd 2023
Analysis and update on Natural Gas and Crude Oil - Updated
Introduction
Today’s updated post is on Natural Gas and Crude Oil. Here on Substack and in the Fiorente2 Stock Market Outlook 2022 and 2023, I have published an analysis on Crude oil but not on Natural Gas. In today’s post, I provide an (updated) analysis of both energy sources.
In October 2021, I had to renew my energy contract with a local supplier in my country. Up to that date, I had a 1-year energy price guarantee cap for gas and electricity, and I needed to decide what to do. At that time, my contract was based on a crude oil price of $50 and Natural Gas at $2.25. As my analysis showed that Crude Oil and Natural Gas were likely to explode further, I extended my contract at a fixed price for three years. That was a good decision; I did not regret it. Many neighbors and friends have doubled, tripled, or paid more than that for their energy bills.
Even when prices have cooled down somewhat, you cannot get a contract for a fixed price anymore in my country, and consumer prices on energy bills always follow the commodity prices by at least six months.
So, doing a cycle analysis on Natural Gas and Crude Oil pays off.
The cause of all this may be the COVID period, with lesser demand for Crude Oil in that period. Only a few months after the World Economy was reopening, the Russian-Ukraine war disrupted the global supply of crude oil. With a lesser supply from Russia from Crude Oil and Natural Gas drove the prices to a peak in 2022. Since then, prices had stabilized but remained higher than before the War started.
So far, our analysis published in the Stock Market Outlook 2023 on Crude Oil followed our forecast until the end of this month (January 2023). This is around the midpoint of the Solar and Lunar eclipses. This point in time is sometimes regarded as a secret by many Gann analysts, but often you see the stock, index, or commodity react heavily during this period. This may even activate an inversion for some time.
It can be tough to trade in these commodities as many variables influence the demand and supply and their effect on the price. However, from the fluctuations in the price of Natural Gas and Oil, one could extract the natural cycles in these energy sources that repeatedly repeat, which can give clues about where these markets are heading. In this post I have used several methods that W.D. Gann could have used.