Gas prices can't raise their head

09 February 2023 251
Gas prices can't raise their head

Gas prices in the U.S. began the current week with a strong increase by 5.2% on Monday and by 2% on Tuesday. If anyone thought this was the beginning of a long-awaited rebound, they were disappointed on Wednesday. The usual situation of the last months returned very quickly: the fall resumed, completely erasing the gains of the previous days. As long as the fundamental factors play in favor of the "bears," there's no reason to expect a significant upward rebound in gas prices.

 

The Energy Information Administration (EIA) expects the average gas price in the U.S. to be $3.40 per million British thermal units this year. This is 47% lower than last year's average prices. A warmer-than-normal start of the year led to lower gas consumption, which caused reserves to fall less than expected. As a result of the increase in gas reserves, the price forecast was decreased.

 

According to EIA Administrator Joe DeCarolis, there are many uncertainties, including the possibility of an extreme cold snap in February or March that could increase demand and reduce gas production, but the probability of such a situation is gradually decreasing as spring is coming. The EIA expects gas reserves to remain above average at least through the spring and summer, which will keep pressure on prices.

 

There is no positive news from Europe either. Despite the current cold snap, which has caused a significant increase in gas consumption, reserves are still much higher than in previous years (69% compared to the 49% average for this time of year). In addition, a new warming is expected at the end of this week.

 

The nearest downside target for gas prices will be the local low of December 2020, set at 2.26. Then it will be possible to focus on the round level of 2, but it is not the perspective of the next few days.

 

 

The following trading strategy option can be suggested:

 

Sell gas in the 2.35-2.45 range. Take profit – 2.26. Stop loss – 2.6.

 

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.

error
More
Comments
New Popular
Send
Commenting rules