The main fundamental factors now affecting the gas price in the U.S:
1.Gas exports to the EU
Gas supplies to the EU are now limited due to the June 8 explosion at the Freeport plant. Previously, representatives of the Freeport plant several times announced the planned restart in November, however the launch date has been postponed. According to the latest data, Freeport LNG exports will be launched in mid-December. Reduced export volumes are putting pressure on U.S. natural gas prices.
An additional factor for lower gas prices in Europe and the U.S. is a forecast of warm weather that has greatly delayed the start of the heating season.
2. U.S. gas reserves
Gas inventories are replenishing at higher levels than in past years, which is also putting pressure on gas prices.
Dynamics of changes in gas reserves in the USA
3. Other news.
A major natural gas leak in Pennsylvania that lasted 11 days has been contained. According to the owner, more than 1 billion square feet of fuel was released into the atmosphere.
The price of natural gas on technical analysis is drawing a flag pattern, which suggests a continued downward movement. It will be possible to say for sure about this movement when the flag breaks and fixes downward. Besides, natural gas prices have approached a strong 0.5 Fibonacci resistance level. The downside scenario will be canceled by a price move above 7.25.
The first target of the move could be the lower boundary of the flag — the level of 6.00. There is also Fibonacci support at 0.618. The second target is the local low, which has been a strong support for gas prices for many months. It is level 5.30.
Finally, we would like to pay attention to the decline in oil prices. Over the past three trading sessions it has decreased by -6% and will soon test its minimum for several months. Such price pressure on the main energy resource can also affect the price of natural gas in the U.S.
On set of the all factors, now it is preferable to open short positions on natural gas in the U.S. with the following parameters:
Take profit 1 – 6,00. Take profit 2 – 5,30.
Stop – 7,25