Demand for natural gas in the U.S. will rise soon

16 February 2023 281
Demand for natural gas in the U.S. will rise soon

The price for natural gas in the U.S. is continuing to trade in a flat and near the local lows. The weakness of commodities in recent days has not broken the flat trend in gas.

 

According to the price dynamics, the price for natural gas in Europe will continue to rise until the end of the year. This situation signals the continuation of the energy crisis.

The attention of market players is turning to refilling of gas reserves as the winter is coming to an end, and based on last year's results, prices are highly dependent on the situation with gas supplies. This year Europe will have to buy gas with no participation of Russia as the main supplier.

Henning Gloestein, director of energy, climate and resources at Eurasia Group, stated that prices may also remain high this year, and there remains a small risk of energy shortages, although serious problems with supplies are probable to be avoided.

The energy crisis is still relevant, which means that a rapid rise in commodity prices in the medium term cannot be excluded.

 

The Freeport LNG plant on the Gulf Coast in Texas is getting back to normal operations. Previously, it was closed because of an explosion last June. The facility has just exported the first shipment of fuel since the accident. 

The question is whether the fuel will reach Europe. The region's reserves are now much higher than they normally are in this time of year, and there is just a little more than a month until the beginning of spring. According to BloombergNEF data, at the moment it is more profitable for American LNG exporters to ship fuel to Asia in March, and to Europe in April and May. 

While the demand for exports is potentially weak, the plant's operation will increase domestic gas consumption in the U.S., which will have a positive impact on its estimates.

 

According to technical analysis, volatility in prices for gas has begun to tighten. A pennant pattern is emerging on the chart, but it is only in the process of forming. Nevertheless, it is possible to win back the movement inside the figure.

Currently, the price impulse is directed upward, so it is possible to catch a fast movement to the upper boundary of the pennant. This is the $2.59 level.

Stop-loss is taken quite large relative to the target, since there is a flat movement in the trade. Stop is set at the level of the exit down from the pennant around the price of $2.43.

 

Rise in the price for natural gas:

Take profit – 2.59

Stop-loss – 2.43

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

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