Last week, natural gas prices in the U.S. continued their corrective pullback from five-month highs. The prices fell to the midterm uptrend line. That was a trigger for market participants to resume buying. And the bearish resistance to the upward rebound from the trend line was less active than it had been in the first days of June and August. Good chances appear for another attempt of gas prices growth to the level of 2.8.
Global gas market continue to monitor the situation in Australia. Over the weekend, the Woodside Energy Group LNG plant workers' union announced that a strike will take place on September 2 if their demands for better pay conditions are not met. Unions at the Wheatstone and Gorgon LNG plants operated by Chevron are expected to decide on a strike date by August 24.
A perspective of losing 10% of global LNG supplies has already had a significant impact on the fuel's prices in Europe and Asia. LNG prices in North Asia have risen to their highest level since early March. Considering the risks of supply disruptions, many countries decided to build up gas reserves ahead of the heating season. According to Kpler estimates, the volume of LNG supplies to Asia in August will reach 22.86 million tons, the highest level since January. Japan and South Korea will be the key drivers of demand growth.
The U.S. market hasn’t reacted as keenly to potential gas shortages. During the spring and summer, the country’s gas reserves have been significantly increased, and gas production has almost reached historic highs. However, even in such a situation, a rise in price is still possible. It’s worth mentioning that at the end of June the excess gas reserve was estimated at 299 billion cubic feet, but by the current moment it has decreased to 188 billion. The increase in LNG exports may further reduce the volume of gas reserves in the U.S.
The Stochastic indicator is giving a signal to buy, increasing the possibility of higher gas prices. The nearest target for buyers will be the level of 2,8.
The following trading strategy may be offered:
Buy gas at the current price. Take profit — 2.8. Stop loss — 2.6.