Potential growth in LNG exports may reverse gas prices

11 January 2023 91
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The price of natural gas succeeded in breaking the downtrend described in the last forecast.

In the same forecast, it was assumed that LNG supplies from the U.S. would increase only in the second half of January, and that the gas price could continue its downward trend until then.

However, now the technical picture has changed, so the scenario of rising prices for gas due to increased LNG supplies to Europe is becoming relevant.

 

The Energy Information Administration (EIA) of the U.S. has published a report on the prospects of energy development. In the report, it is predicted that 2023 will be stronger than 2022 for the U.S. gas industry According to the operator of the Freeport plant, LNG supplies will resume in the second half of January, and by March the operating capacity will be comparable to production levels before the accident.

In addition, in order to meet the high demand for gas in Europe and Asia, facilities in the U.S. will continue to operate at the maximum capacity. The EIA expects that LNG exports from the U.S., the most of which come from Texas, will beat new records by March 2023.

 

Yesterday, the price of natural gas fell due to new forecasts of warm weather in the U.S. At the same time, experts do not exclude that gas futures may go back to $5 or higher, but it will take a lot of Arctic air to change the weather over the country for a few weeks. So, there is some uncertainty about the future weather forecast. At the moment, investors plan for a warming scenario and any sign of a drop in temperature could cause a rise in gas prices.

 

From a technical point of view, the price for natural gas succeeded in breaking the downtrend, which lasted for several trading sessions. Moreover, this trend was tested from the top and now prices are trying to catch the upward impulse. Also there is a double-bottom pattern on the graph, which can be one of the signs of a reversal.

The target for this movement could be the level of 3.9. It corresponds to the level of price trading in recent days.

The stop-loss can be set on the round level of 3.5. Going down under this level will mean the continuation of the downtrend.

 

Rise in the price for natural gas:

Take profit – 3,9

Stop-loss – 3,5

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