Natural gas is moving against the general trend of commodities. Yesterday after the Fed meeting, the main group of commodities increased, while gas prices, on the contrary, dropped.
The Fed raised rates by a quarter of a percentage point, but stated its willingness to pause further increases in borrowing costs due to the recent turmoil in the financial markets.
After the meeting, all market participants continue to bet that the regulator will be forced to lower the key rate already this year. This situation will be positive for all commodities.
The price decline occurred even as the gas volumes flowing into liquefied natural gas (LNG) plants hit a record high this week. It happened after Freeport LNG’s plant in Texas emerged from an eight-month downtime in February.
The prices fell, despite short-term cold weather forecasts and higher demand for heating next week. Traders noted that the impact of lower temperatures in late March was less significant than at the end of January.
Positive fundamental factors are unlikely to go unnoticed, therefore, gas prices will rise.
Wood Mackenzie Ltd. estimated possible results of China’s economic increase with a baseline scenario of 5.5% GDP growth and a more optimistic forecast of 7% growth. According to the company, the return of commodities to their highs of last year is unlikely. However, if Beijing traditionally exceeds its plans and implements a positive forecast, then it might cause a surge in energy prices.
Natural gas demand is gradually rising.
Despite the decline, natural gas prices consolidated at the important level above $2.30. That means, a reversal in gas prices continues, and the flat movement remains relevant.
The growth target is the upper boundary of the flat movement near the price of $2.59. The Stop-loss is set at the second move below the support level, which is equivalent to $2.26.
Natural gas prices are likely to rise:
Take profit – 2.59
Stop-loss – 2.26
This content is for informational purposes only and is not intended to be investing advice.
