Natural gas prices have been steadily declining for 10 days.
On Tuesday, the price of energy contracts in the US fell by about 3%. The decline was due to forecasts of weakening demand for gas in the next two weeks.
At the moment, natural gas prices are holding below $2.5.
Preliminary data showed a decrease in gas production in the US. But these figures with forecasts of continued high temperatures in most parts of the country could not prevent prices from falling.
Meanwhile, on Monday the demand for electricity in the state of Texas again reached a record level. It surpassed the previous high set on July 18. This record could be broken again in the coming days. The prolonged heat wave is forcing households and businesses to use air conditioning more often.
At the same time, most of the electricity in Texas is generated by gas-fired power plants. However, it is important to note that renewable energy has also helped the state to cope with peak loads. This also restrains natural gas prices.
Meanwhile, the leading operator of the US regional power grid shared its data. Natural gas-fired power generation in the PJM Interconnection continues to grow. It increased more than 8% in July to a record high.
According to the company's calculations, electricity demand increased 23% month-over-month in July. The abnormal heat wave on July 27 and 28 saw electricity use peak at 145,979 megawatts (MW).
As abnormally high temperatures continue in the US, demand for natural gas may continue to increase.
The natural gas continues forming an upward corrective trend on the H4 timeframe. The price is approaching the trend support, which has repeatedly shown its importance.
The fourth rebound from the ascending support line is expected. The price of gas is in the profit range.
Signal:
The short-term outlook for natural gas is to buy.
The target is at the level of 2,765.
Part of the profit should be fixed near the level of 2,580.
A Stop-loss should be placed at the level of 2,320.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
