The price of natural gas is rising, while other commodities are experiencing a decline amid tighter inflationary conditions and tough rhetoric from regulators. The prices are likely to correct. Expectations of colder weather in the United States do not indicate higher gas consumption. Refinitiv expects US gas demand to decline from 95.8 to 95.5 billion cubic feet per day next week due to reduced supplies to export plants.
The UK is not experiencing any problems with gas supply. A starting point for commodities prices correction was the country's high consumer inflation.
In its forecast for summer 2023, National Gas Transmission reported that the UK will have enough natural gas to meet summer demand. It will be mostly imported from areas of the North Sea owned by the United Kingdom and Norway. Domestic demand is not expected to be difficult to meet during the summer. The summer period starts in April and lasts until September.
In response to the energy crisis, gas production is also growing rapidly. This development is unfavorable for gas prices.
Chevron is looking for an opportunity to expand offshore natural gas exploration and production in Cyprus, Egypt and Israel. According to a recently placed tender, the company is looking for a drill ship to lease for 2024, with an option to extend its use for a few more years.
The Turkish government has announced the upcoming start of natural gas production at the Sakarya field in the Black Sea. Deliveries are expected to start today. The initial production capacity of the facility is estimated to be around 10 million cubic meters of gas per day. The daily production capacity should increase to 40 million cubic meters in the following years.
According to technical analysis, the price of natural gas is at a crossroads between two rectangle patterns. Given the negative market sentiment, further moves are likely to be downward. Gas will most probably trade inside the lower flat again.
The downside target will be the recent low of $2.15. A Stop-loss could be placed upon fixing inside the upper rectangle, which matches the price of $2.55.
A decline in the price of natural gas:
Take profit – 2.15
Stop-loss – 2.55
This content is for informational purposes only and is not intended to be investing advice.