Natural gas prepares for new growth momentum

27 July 2023 239
Natural gas prepares for new growth momentum

Natural gas prices have been in a narrow range over the last few trading sessions. Neutral dynamics were accompanied by active growth in oil prices, which increased by 6% over the last week and a half. The current revaluation of oil and the potential for further upward movement may support natural gas prices. Investors will switch from expensive oil to cheaper fuel, which will stimulate the quotations’ growth.

Gas production cuts in Russia will be positive for the market. The country has the largest share of reserves in the world, at 24%.

Natural gas production in Russia in the first half of the year was almost 13% lower than a year earlier. One of the reasons for such a drop was a decline in energy products exports through pipelines to Europe.

According to Bloomberg, Russian producers delivered 319.3 billion cubic meters of gas in the first half of the year. Last year, the country started significant production cuts of this fuel. In June, production amounted to 42.8 billion cubic meters. This is 8.6% less than in the same month a year earlier.

New projects, even in natural gas, meet resistance from activists. In the future, this will reduce the fuel supply on the market, which could lead to higher prices.

The environmental organization Greenpeace is challenging the UK's decision to issue new licenses for oil and gas exploration in the North Sea. According to experts, the government has failed to conduct a thorough assessment of emissions from burning the extracted fuel, as well as potential environmental damage. The case is now being heard in London's High Court.

Lawyers of the UK Department of Energy Security and Net Zero (DESZN) defend the position that the assessment of final emissions isn’t a mandatory procedure for issuing licenses.

According to technical analysis, natural gas is trading closer to the lower boundary of the uptrend. Also, we can see a flag pattern with an upward exit on July 20 on the chart. We should expect a new growth momentum.

The growth target will be the local high, which corresponds to 2.93. A stop-loss will be set at the break of the uptrend and price decline to 2.53.

Increase in natural gas price:

Take profit — 2.93

Stop-loss — 2.53

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

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