Second attempt by gas prices to break through the level of 3 will not take long to wait

U.S. natural gas prices, as expected last week, returned to an uptrend. The prices have climbed to the level of 3 for the first time since early March. The first attempt to break up from below was not successful, but there was no deep correction either. The price found support at the level of 2.75, from where a new growth wave started. Now bulls are definitely aimed at approaching the level of 3 again.

The main reason for rising gas prices in most global markets remains the news from Australia. Even though the United States does not import LNG itself, demand for fuel from customers of Australian suppliers will surge in case of strikes. The attractiveness of exports might reduce the volume of gas available in the country’s domestic market. This, in turn, would lead to higher prices.

Given the fundamental changes, which might take place in the gas market in the near future, many traders quickly closed their short positions. Over the past week, they got rid of 32,000 gas sales contracts. As a result, the net long position in gas jumped by 70% at once and reached 74,000 contracts.

Meanwhile, abnormally hot weather persists in the U.S. According to meteorological forecasts, there will be no significant decrease in temperature until at least the end of next week. Electricity consumption records are regularly set in Texas. This week, the need for gas flaring might additionally rise due to a fall in wind speeds and a corresponding drop in electricity generation.

Despite actively increasing gas prices in recent days, technical indicators are still far from the overbought zone. Thus, the prospects of further rise in fuel prices remains significant. The buyers’ nearest target is another test of the 3 level and an update of the half-year high.

The following trading strategy may be offered:

Buy gas for the current price. Take profit – 3. Stop loss – 2.7.

Traders may also use the Trailing stop instead of the fixed Stop loss at their discretion.