The price of natural gas moved out of the mid-term sales zone

11 April 2023 211
The price of natural gas moved out of the mid-term sales zone

Recent news from Europe about the lack of long-term LNG contracts could affect gas pricing.

At the moment, Europe has not yet made significant progress in signing long-term contracts for liquefied natural gas (LNG) supplies, which could replace imports of Russian fuel. This could have a negative impact on the regional area, as a recovery of demand in China is likely to tighten the commodity market.

In 2022, the European Union imported 121 million tons of LNG, which is 60% more than the previous year. But the cost of such supplies was high, as purchases were made on the spot market rather than through the signing of long-term contracts. 

Analysts estimate that Europe will have more than a third of all global spot market deals in 2022, compared with only about 13% in 2021. In the absence of further long-term contracts, the region's percentage of contracts could rise to 50%. 

The absence of long-term contracts for LNG supply can lead to an increase in demand for gas in Europe and the rise in prices for gas. In addition, increase in demand for gas due to Europe's goals to reduce emissions from fossil fuels by 55% by 2030 could also help increase the price for natural gas in the future, as it is a less "dirty" alternative to coal. In case of no long-term contracts for LNG supply, Europe may face gas import problems in winter 2023.

Natural gas quotes went out of the downtrend on the H4 timeframe, indicating the beginning of the new trend creation.

On the H1 timeframe the price is in the process of forming the second downward wave, where there are signs of its completion and the beginning of the third upward wave formation. In any case, the clarity will come after the breaking the top of the first wave at the level of 2.220. At the same time, a breakout of the 2.220 level could create a short-term "northward" impulse.

 

Signal:

The short-term prospects for natural gas are buying

The target is at the level of 2.445.

Part of the profit should be fixed near the level of 2.220.

The stop-loss is at the level of 2.030.

"Bullish" trend has a short-term character, so the volume of trade should not exceed 2% of your balance.


This content is for informational purposes only and is not intended to be investing advice.

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