The movement of gas prices remains largely isolated from the price dynamics of other commodities. The banking crisis in the U.S. and changes in expectations for the Fed's policy rate aren’t currently having any significant impact on gas prices.
At the moment, the price is being formed considering the fundamental factors such as demand. Most likely, the bottom of the gas market has already been passed, and demand will now be growing due to the opening of the Freeport LNG export plant in the U.S. Growth in exports of LNG from the U.S. will put pressure on domestic supply which could push prices higher.
Analysts believe the energy crisis in Europe is far from being over. They are concerned about the possibility of having storage facilities filled for the next heating season.
According to preliminary data provided by CME Group, the volume of open positions in the natural gas market increased on Monday, reaching the number of 7.7 thousand contracts. As a result, the price of gas may go over the level of $3 per one million British thermal units (mmBtu).
Gas prices have started the week with a positive dynamic. The rise occurred after three consecutive daily pullbacks and was combined with an increase in the volume of open positions. This fact indicates a possibility of further price growth in the short term.
According to the technical analysis, the price of natural gas in the U.S. has reached the bottom. At the moment, a process of consolidation is taking place, setting positions for an attempt to form a rising trend. On Monday, the price of gas rose in a powerful bullish candlestick. A local bottom was established near the consolidation level in the first half of this February.
Most likely, the gas price will continue moving sideways, aiming for exiting upwards. The local highs near the level of $2.95 could be the growth target. This is slightly below the round level of $3, which may become a point from which the sales can start. A stop-loss will be placed at the exit of Monday's bullish Marubozu candlestick, which is the level of $2.30.
An increase in natural gas prices:
Take profit – 2.95
Stop-loss – 2.30
This content is for informational purposes only and is not intended to be investing advice.
