Demand in China is weakening, affecting natural gas

Natural gas prices follow oil quotes, declining in recent sessions. Concerns about fossil fuel demand are preventing a global medium-term price reversal. The growth attempt, which was noticed since the middle of April, failed. Recession risks are increasing day by day, making gas prices remain under pressure in the nearest future.

Gas supplies to China are failing to meet expectations. The growing impulse of the economy began to fade under the pressure of external factors.

Liquefied natural gas (LNG) imports to Asia declined in April as China and Japan reduced purchases.

The total volume of gas fuel imports in April was 20.86 million tons. According to data compiled by Kpler analysts, this is lower than in March (22.23 million) and February (22.19 million). The level of purchases by China has not yet recovered, despite signs of increased demand for energy. In April, the country bought 5.23 million tons of gas. This is down from 5.48 million in March, but up from 4.99 million in February.

The transition to green fuels is accelerating more rapidly than expected.

The Liquefied Natural Gas (LNG) terminal project in Stade, Germany, has announced that it has begun evaluating market demand for ammonia as a way to transport hydrogen.

Hydrogen is becoming more and more perspective, as its production using renewable energy sources can contribute to the transition to a lower-carbon economy. A final investment decision is expected in the middle of 2023. In case some companies refocus on ammonia imports and hydrogen production, this could weaken the demand for fossil fuels in the long-term.

According to the technical analysis, natural gas broke down the support level and entered the flat range zone. Now the continuation of the movement to the lower limit of the range is possible. The level of $2,05 will be the downside target. Stop-loss can be set at $2.30 when going up out of the range.

Natural gas price reduction:

Take profit – 2.05

Stop-loss – 2.30