The natural gas price could rise amid hot summer

11 May 2023 200
The natural gas price could rise amid hot summer

Natural gas has traded in a wide range since the beginning of this year. There are many positive fundamental drivers for gas. A hot summer will hit many countries around the world. Over the past couple of days, high temperatures have been reported for the coming months in Asia, Europe and the United States.

 

Asia's abnormal heatwave this summer will hit China, threatening power shortages. Last year's warm summer disrupted global supply chains. Scientists say climate change is increasing the frequency of extreme weather incidents. Beijing has prepared for the abnormal heat by ramping up coal production to power plants. Current high coal reserves mean the national energy crisis can be prevented. Meanwhile, hot weather could also provide support for oil and gas demand this summer.

 

Europe and the northeastern United States will face abnormal heat waves this summer. There will be serious temperature extremes above historical norms. This situation creates risks for food supply and increases the demand of electricity.

With a probability of more than 60%, temperatures in the northeastern United States, France, Spain and Italy will be well above average this summer. It was predicted by the scientists from the Copernicus Climate Change Service. Abnormally high temperatures will increase demand for natural gas for powering air conditioners. At the same time, Europe is trying to replenish its strategic gas reserves before the winter season.

 

According to the technical analysis, the price of natural gas is closer to the lower boundary. It gives a signal to open long positions. The growth target will be the nearest Fibonacci resistance level, which is based on the whole wave of falling from the local maximum. It will be reached when the price rises to $2.35.

A stop-loss is placed below the bullish Marubozu candlestick of 8 May at the level of $2.13. Natural gas is trading near the 0.236 Fibonacci level. Closing below it could open the way to local lows.

 

The natural gas price is likely to rise:

Take profit — 2,35

Stop-loss — 2,13

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

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