Gas prices have risen in recent weeks, mainly due to the hot weather around the world. It increases the consumption of electricity, thereby boosting demand for gas. The gas market also benefited from additional oil output reduction by OPEC.
Saudi Arabia said it would extend its voluntary oil output cut in August. The cut could be extended beyond that month. According to Deputy Prime Minister Alexander Novak, Russia is also expected to cut oil production by 500,000 bpd in August.
There are some other positive factors for gas. Demand for it may increase due to a rise in storage capacity before the winter season.
British energy company Centrica has almost doubled the capacity of the largest natural gas storage facility in the UK. It could hold about 30 billion cubic feet of gas when it reopened in October 2022. Centrica has since conducted further engineering work and invested additional money to improve the facility. It can now store up to 54 billion cubic feet of gas.
Demand for LNG from the world's second largest economy persists. Economic stimulus could help restore the rate of growth in fossil fuel consumption.
According to Bloomberg, China will become the world's number one importer of liquefied natural gas in 2023. In addition, for the third year in a row, Chinese companies have signed more long-term contracts to buy gas than any other country. China wants both to prevent another energy shortage and to stimulate economic growth. According to analysts at Trident LNG, a stable energy supply has always been a priority for the Asian country.
According to the technical analysis, the price of natural gas in the United States has formed an uptrend in the form of a broadening wedge. That is the trading range for gas. The latest news could give the price an uptrend impulse. The growth target will be the local maximum at the level of 2.90. It’s recommended to set a Stop-loss at the renewal of the last trading days’ minimum, which corresponds to the price of 2.54.
Increase in the price of natural gas:
Take profit — 2.90
Stop-loss — 2.54
This content is for informational purposes only and is not intended to be investing advice.
