After natural gas prices set a local high of 2.93 at the end of June, they went into a corrective decline. The price moved within the descending channel for more than three weeks until it left the upward channel last week. Bulls are trying to retake the initiative, and they will need to raise the gas quotations to 2.8 for this.
The hot weather has caused an increase in the use of air conditioners in the USA. Temperatures are rising, and so are utility bills. The Electric Reliability Council of Texas (ERCOT) has seen that electricity demand set new record highs ten times in the past five weeks. Analysts at Gelber & Associates note a slight downturn in gas usage recently. However, fuel consumption still hovers around 46-47 billion cubic feet per day. This is a very high level for the current time of year.
The mild winter has contributed to an increase in U.S. natural gas supplies. However, the high demand for electricity in recent weeks has gradually eroded those savings. Electricity industry analysts estimate that this summer, U.S. utility bills will be nearly 12% higher than a year ago.
European countries are also suffering from record-breaking heat. In addition, the situation is aggravated by a decrease in power generation at wind farms. According to Refinitiv analysts, gas prices in Europe will remain in the same range in the future, given the high filling of storage facilities and the recovery of fuel exports from Norway. However, the situation may be changed by unexpected supply disruptions or a sudden jump in demand.
The nearest growth target for U.S. gas prices is 2.8. Once it is reached, the way to the June highs and the round mark of 3 will be opened. The scenario mentioned before is the main one, while the quotations stay above the upper boundary of the broken downward channel. Now it is near 2.62.
We may offer you the following option of trading strategy:
Buy gas at the current price. Take profit — 2.8. Stop-loss — 2.62.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.
