Natural gas price may go into correction within a bullish trend

26 October 2023 154
Natural gas price may go into correction within a bullish trend

The price of natural gas has been rising since late last week due to investors' concerns about the Middle East conflict. However, the shutdown of oil and gas operations in the region will not have a serious impact on gas production, according to Eni CEO Claudio Descalzi. The only exception is gas production at Israel’s Tamar field, which has been suspended for safety reasons. The natural gas price may stabilize in the near future, Descalzi added.


According to the International Energy Agency (IEA) forecast, global demand for natural gas will start to decline by 2030, but will remain close to its historical peaks up to 2050. Gas consumption will be more resilient compared to other energy products.

The share of oil, coal and natural gas in the global energy supply will drop significantly by the end of this decade, said EIA Executive Director Fatih Birol. It is now about 80%.


Researchers have already identified that natural gas consumption growth is slowing. Between 2017 and 2021, global demand increased by about 2.5% per year. Between 2022 and 2026, it will increase only by 1.6%, by 2030 it will grow by 0.4%, and by 2050 it is expected to reach a plateau.


Meanwhile, the European Union (EU) is on track to eliminate Russian fossil fuels within this decade. The European Commission officials announced this on Tuesday.


According to the agency's report, the EU expects imports of Russian natural gas to drop to 40–45 billion cubic meters in 2023, down from 155 billion cubic meters in 2021.


To replace fuel from Russia, EU countries increased imports from Norway and reduced gas consumption. Liquefied natural gas (LNG) shipments to the region surged, partly due to supplies from the United States.


Long-term fundamentals predict a decline in natural gas prices. However, the current trend remains upward.


Natural gas prices are in the formation of an ascending correction channel on the D1 timeframe. They are approaching the trend resistance. If the price breaks through this resistance, it may create conditions for a technical pullback.


The Bulls Power indicator (standard values) is approaching the zero level on the H4 timeframe, which may signal that the bulls are weakening.

Signal:

The short-term outlook for natural gas suggests selling.

The target is at the level of 2.925.

Part of the profit should be taken near 3.210.

The Stop-loss is set at 3.600.

Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.

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

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