The Fed's hawkish stance proved to be adverse for the natural gas market. The Fed’s Chair said that the committee is poised to push the rate higher than expected if the labor market continues to be strong and inflation persists. A corrective rebound from the lows has been completed, and gas is now showing a downward trend again. The fundamentals in the gas market have remained quite negative. The launch of the Freeport LNG plant had no substantial impact on the natural gas demand. And the 5% growth target for China's economy wasn’t a driver for higher gas prices.
A note on natural gas from Gelber & Associates, a Houston-based consulting firm specializing in energy markets, said that temperatures in Europe are rising.
An unusually mild winter brought a significant drop in heating demand in the U.S. this year, leaving more gas in storage than first estimated.
As Europe approaches the end of the heating season, there is a growing belief that the region will still have record gas volumes. This is going to reduce the pressure on prices.
According to Gas Infrastructure Europe (GIE), natural gas inventories in the European Union and the UK hit a record high as of March 1, with storage capacities being 61% full.
Stocks are now 66% above the ten-year average, compared to a 21% deficit recorded in 2022.
Based on the technical analysis, natural gas prices have entered the flat seen in the beginning of February. There has also been a consolidation below its upper boundary over the last couple of days. With negative sentiment in the market, there is a high chance of moving to the lower boundary of the rectangle. In this case, the downside target will be the level of $2.4. Stop-loss can be placed when the price updates the highs of the last two days, i.e. the level of $2.7.
Natural gas is likely to decline:
Take profit – 2,4
Stop-loss – 2,7
This content is for informational purposes only and is not intended to be investing advice.
