Prices for the U.S. gas finished Wednesday's trading session with a good bounce from a new low of a year and a half. Nearly hitting 3.4, prices reversed upwards and closed the trading at 3.67 (almost +8% from the low, and +3% from the close of the previous day). However, on Thursday morning, gas is down in price again; a significant change in demand is needed for a more sustainable recovery.
As long as the warm weather continues in the U.S. and Europe, gas prices will remain under pressure. A colder weather, according to new forecasts, may come by the end of January, but these expectations obviously are still not enough to push prices up. At the moment, the demand for gas continues to decline gradually.
The long-awaited restart of the Freeport LNG export plant in Texas could encourage demand, but no change for the better is evident here either. Starting next week is the timeframe that was previously noted as the most probable timeframe for Freeport's operational launch, but there are no new comments from the plant's representatives.
For now, the only sign of the plant's imminent restart is the growing number of LNG tankers that are in nearby waters awaiting the start of liquefied gas loading. However, some of them have been standing around Freeport since November, so this is still unreliable proof of a plant restart before the end of January. Therefore, analysts' estimates regarding the date of restart are gradually shifting to February, which is clearly not good for the demand for gas and its exchange quotations.
In case of restart the decline, the first target for gas prices in the U.S. will be the 3.4 level, which yesterday was not reached by the quotations just a little bit. Then we can note the level of 3.2, which is the maximum of February 2021, where buyers may try to retake the initiative again.
The following trading strategy option can be suggested:
Sell gas at the current price. Take profit 1 – 3.4. Take profit 2 – 3.2. Stop loss – 3.9.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
