Natural gas is holding an uptrend after rising by almost 35% from the lows. However, it is quite noticeable that the growth momentum is fading and gas prices are slowly moving flat. February’s data on higher-than-expected consumer prices in Germany were negative for the commodity market. Consumer prices rose by 9.3% compared to last year. The main contribution to inflation was made by the service and food sectors. In January, annual consumer price growth was at the level of 9.2%. High inflation might force the ECB to increase rates above expectations, thereby pressuring all commodities.
Nevertheless, the news background is positive for natural gas prices.
U.S. natural gas prices increased to a new monthly high. It was driven by the forecasts of less favorable weather conditions, which contributed to a rise in fuel demand.
The price increase was also caused by lower gas production in February, along with rising fuel supply to the U.S. export terminals to record highs. At the same time, the Freeport LNG plant in Texas received additional gas volumes for LNG production after the shutdown.
Currently, Freeport LNG delivers more than 0.8 million cubic feet of LNG per day to the market. In case of operating at full capacity, the plant can refine about 2.1 million cubic feet of gas into LNG for export. However, federal regulators have approved the restart of only two out of three liquefaction lines for now.
According to the technical analysis, natural gas is moving within the uptrend. As we said before, this trend is slowing, thereby questioning a strong rise in gas from the current levels in the short term. Nevertheless, the prices are close to the low of the trend, and it provides an opportunity to open long positions. A local high at $2.82 will be the target. Stop-loss might be set at the breakdown of this trend, which is equivalent to $2.72.
Natural gas prices are likely to rise:
Take profit – 2.82
Stop-loss – 2.72
This content is for informational purposes only and is not intended to be investing advice.