Rebound drivers for natural gas prices

17 January 2023 250
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The natural gas is still one of the most volatile assets. The price has declined by 23% since the beginning of the year, and it’s one of the worst performances among all kinds of assets.

Let’s take a deeper look at the current newsfeed and try to find some growth points for natural gas in the U.S.

Let’s consider a news article that seems to be significant but still was left without decent attention.

The U.S. is ready to supply natural gas to Europe at a price of $12/Mmbtu, which is about $380 per thousand cubic meters, and it would mean that the gas price in the U.S. will be $4/Mmbtu. But, according to a statement made at a conference in Abu Dhabi by Toby Rice, CEO of the largest U.S. producer of natural gas EQT, it’s necessary to sign long-term contracts to achieve that. He also noted that this price would make a great deal, especially in comparison with the current $20/Mmbtu.

At such a low price, Europe will maintain high levels of LNG imports from the U.S., which would have a positive impact on gas prices in the States as well. Domestic supply within the country will be lowered due to massive exports of LNG to Europe.

Gas prices in Europe fell to a record low level since September 2021, as supply prospects improved due to large reserves of China, which make the providers send shipments of LNG to Europe.

The following news item is closely linked to the previous one. The current price of natural gas in Europe is $600, while the U.S. is ready to sign long-term contracts at a price of $380. Thus, a decline in gas prices in Europe won’t affect the volumes of gas imports from the U.S. It may provide support for the natural gas prices despite the news might seem negative at the first glance.

According to the tech analysis, the gas prices are attempting to stabilize and forming an oblique rectangle. If the price exits this rectangle upwards, this would mean an actual attempt of gas price reversal in the U.S. The first growth target will be the level of $4.10, which corresponds with the local highs of the current year. When this target is reached, a sideways movement will be started in a form of rectangle. From this point, it will be possible to consider which option is more likely to happen — an upward breakdown of the rectangle and a further price increase, or a rebound to the bottom of the figure.

Stop-loss is set near the lows of the candle body, which is the level of 3.47.

A rise in the natural gas price:

Take profit – 4.10

Stop-loss – 3.47

This content is for informational purposes only and is not intended to be investing advice.

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