Risks of LNG supply disruptions boost natural gas prices

18 August 2023 177
Risks of LNG supply disruptions boost natural gas prices

Risks of global LNG supply problems are persisting. At the same time, natural gas prices have declined in recent days to this summer's averages. Any increase in supply disruptions will lead to a new surge in fuel prices.

Last week, turmoil resumed with the news of possible strikes by Australian workers. As a result, gas prices rose by 40% in a day.

The market is still tight as negotiations with the Offshore alliance in Australia continue next week. Also, maintenance work on Norway's gas fields is being prolonged, with the scope to expand in late August and early September.

Chevron has faced the prospect of a partial or complete shutdown at Australia's second-largest LNG plant after the union vote on Friday.

Governments partially create shortages themselves, resulting in higher gas prices.

The Australian Petroleum Production and Exploration Association (APPEA) has reported a change in policy for the Perth and Canning basins located in Western Australia. This week, the regional government banned gas exports via the existing pipeline network.

According to APPEA, these changes will deter investment in onshore gas production and supplies. At the same time, the state needs to increase imports. Fuel demand rises as coal use is phasing out and new mineral processing facilities are emerging.

In terms of the technical analysis, natural gas prices showed bullish momentum yesterday. Recent news adds an incentive to open long positions. The market is not currently laying down supply risks as the price is at the average levels of June and July.

The growth target will be the round price of $3.00. Besides, the previous price peak recorded two weeks ago and the upper limit of the flat trading range since early this year were also near it. A Stop-loss will be set when declining below yesterday's bullish Marubozu candle at $2.56.

Natural gas prices are likely to increase:

Take profit – 3.00

Stop-loss – 2.56

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

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