Similarly, oil prices in natural gas got an upward momentum after positive U.S. inflation data. However, this momentum was also short-lived.
The Freeport situation remains one of the main issues in natural gas pricing. The current news is negative for gas prices.
At least two LNG cargoes scheduled to be loaded from the Freeport terminal in Texas in late January and early February were cancelled. The facility should restart in the second half of this month.
Speculation about the timing of the plant's operation restart caused great volatility on the gas markets. The company is capable to export 2% of the U.S. gas production. Its seven-month shutdown meant that the volume of gas equivalent to all LNG exports from the U.S. in about a month was provided for domestic consumption, contributing to reserve accumulation and lower prices.
Additionally, U.S. natural gas reserves came out yesterday. The actual number of reserves was higher than predicted and despite the winter month, gas reserves increased rather than decreased. There is a bearish factor for gas prices again.
Natural gas reserves in the U.S.
The weather in the U.S. also remains an important factor for natural gas prices.
Weather forecasters say that except for a brief cold snap in the southeastern region of the U.S. over the coming weekend, overall moderate temperatures will remain unchanged until at least January 22.
That means it will be another 10 days before long-term weather models predict a renewal of the extremely cold arctic winds typical for this time of year, which could stay until February in the central and eastern regions of the U.S. and increase demand for the blue fuel.
According to the technical analysis, the price of natural gas failed to develop an uptrend. In light of the negative fundamental news, it is assumed that gas prices will continue to decline. The target will be the level of lows reached recently, it is the level of $3.409. Stop-loss is set at the level of $3,800.
Natural gas price reduction:
Take profit – 3.409
Stop-loss – 3.800
This content is for informational purposes only and is not intended to be investing advice.