Natural gas prices correcting in an uptrend

30 June 2023 173
Natural gas prices correcting in an uptrend

The cost of natural gas is falling amid low demand in Europe.

 

Warm weather and energy-saving measures have led to this. While gas purchases remain at high levels, they have fallen significantly compared to last year. This is due to the retention of some of last year's reserves in Europe's storage facilities.

 

Lou Ming Pang, Senior Analyst at Rystad Energy, suggests that under current conditions Europe's natural gas storage facilities could be filled earlier than planned, even before winter.

 

The EU natural gas storage capacity began to fill up back in January. However, the pace of filling has slowed down recently. In early June the reserve fill rate was 48% higher than the ten-year average for this period due to the unusually warm winter. This triggered a drop in gas prices and increased industry demand. This was reported by Reuters columnist John Kemp.

 

According to Rystad Energy, European gas storage facilities were 76% full as of June 25. That was 20% higher than a year earlier. The EU plans to reach 90% by November 1.

 

Higher demand from industry and partial production suspension in Norway due to maintenance have contributed to the price increase. The cost of natural gas has risen 38% this month, according to The National.

 

At the same time, U.S. gas consumption also declined amid a mild summer. Meanwhile, the country's natural gas production remains high, despite companies regularly cutting the number of rigs.

 

The natural gas H4 timeframe shows the process of forming an uptrend. The price pullback from the trend resistance indicates a price movement towards the uptrend support.

 

The Relative Strength Index (standard values) shows a divergence, which gives a leading signal for the possibility of a short-term trend change.

 

Signal:

 

Short-term prospects for natural gas suggest selling

The target is at the level of 2,350.

Part of the profit should be taken near the level of 2,550.

A stop-loss could be placed near the level of 2,830.

 

The bearish trend is short-term, so trade volume 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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