Global natural gas prices are climbing out of their year-to-date flat movement. The main reason for growth was the turmoil at the world's major natural gas plants. Most likely, the protests will end in the coming weeks and gas prices will return to their original values. However, the growth momentum may continue now, as rather large volumes of fuel production are under threat. The process of traders closing short positions may also fuel the growth.
Chevron and Woodside Energy Group said they are in talks with labor unions to prevent protests at Australia's liquefied natural gas (LNG) plants. These plants provide about 10% of this energy carrier to the global market. According to Offshore Alliance union officials, talks on wage increases will continue today and next Tuesday.
Any instability would disrupt Australian LNG exports and increase competition for supercooled fuel, forcing Asian buyers to compete for cargoes with European buyers. Japanese and South Korean companies are the biggest consumers of LNG from the North West Shelf project, while gas from Chevron's Gorgon and Wheatstone plants mostly goes to Japan.
In addition to the turmoil at the plants, investors have growing concerns about the upcoming winter season.
According to representatives of German energy company EON SE, the European market still remains threatened by a spike in energy prices this winter. Homes and businesses need to continue saving gas and electricity.
The German public utility has warned of a possible significant increase in gas prices. This could happen if unplanned supply disruptions coincide with cold winter weather.
According to technical analysis, the price of natural gas is hitting its year-to-date highs. A flat top breakout has already happened, so there are opportunities to reach new highs.
The 1.618 Fibonacci level from the last corrective movement will be the growth target. It matches the price of $3.23. A stop-loss could be placed upon a decline below the previous high of $2.90 set at the end of June.
An increase in the price of natural gas:
Take profit – 3,23
Stop-loss – 2,90