U.S. gas prices are gradually losing the gains of late February and early March, again getting closer to the range of 2.1-2.2, where the previous local lows were set. The development of the situation in the U.S. gas market leaves no hope for a substantial rise in prices in the near term and more chances of maintaining the current trend of declining.
Fitch Solutions Country Risk & Industry Research has released a new forecast for U.S. gas prices. In 2023 the price is expected to average at $3.6 per million British thermal units (BTU). This figure is similar to the level of 2021 ($3.7 per million BTU), but significantly lower than the average of last year ($6.5 per million BTU).
Therefore, analysts have revised downward their expectations for U.S. natural gas prices. Previously, Fitch Solutions projected the gas price of $6.5 per million BTU in 2023, the same as last year. The main reasons for such a strong decrease in gas prices forecasts are low demand and high level of gas reserves by the end of the winter.
According to recent data from the U.S. Energy Information Administration (EIA), the total amount of gas in storages is 1.972 trillion cubic feet, which is 36% higher than last year’s level of 1.451 trillion cubic feet. Meanwhile, gas consumption has dropped from 84 to 58 billion cubic feet, and the end of the heating season is only 3 weeks away.
The RSI indicator is gradually declining but still far from the oversold zone. Thus, gas prices now have every chance to fall to 2.2 and later to update the 2.5-year lows.
The following trading strategy may be offered:
Sell gas for the current price. Take profit – 2.2. Stop loss – 2.4.
Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
