US natural gas futures stabilize after the strongest three-day drop in 10 months. At the same time, in the west of the country, there is a sharp growth in spot prices, likely caused by increased demand for heating. This demand grew because of the fall in temperature. According to weather forecasts, a significant cooling until Sunday is expected in most parts of the US territory. In the Midwest and East, the air temperature might be lower than previously expected.
Cooling will give a short-term boost to the growth of natural gas.
It is reported that in 2023, Canada and the US are very likely to set new records for natural gas extraction. However, the task can be very difficult because of decreasing demand, weak pipeline capacity, and lack of new liquefied natural gas (LNG) for export. Production growth in 2023 is forecast to be slower compared to previous years. A likely slowdown in the growth of gas production is positive for quotes.
Analysts of investments of Goldman Sachs report in their survey that in 2023, the commodity markets face the consequence of the lack of investments. They admit that even the significant price growth at the beginning of the year didn’t increase the investments in raw material projects. The main obstacle to this was a sharp increase in rates made by central banks, which resulted in higher borrowing costs. This is another growth driver for energy products investors can turn to.
The prices for natural gas again came closer to the strongest support level. Earlier, our forecast about the rebound from this level came true. Now, thanks to positive news, we think that this level will endure again, and gas prices will bounce back. The first target of rebound is the 0.236 Fibonacci level, it’s 6.325. It is located near the 200-Day Moving Average from which gas prices rebounded last time.
You can place the stop-loss behind the support level near tomorrow's high of 5.5150. In case of a downward breakthrough of this support, the gas prices can speed up their movement so, it is better to locate the stop-loss in advance.
Growth of price for natural gas:
Take profit — 6.325
Stop-loss — 5.150
This content is for informational purposes only and is not intended to be investing advice.
