Natural gas prices continued to decline this week, driven by lower demand. U.S. natural gas production is increasing and heating demand is falling, allowing utilities to draw less gas from reserves than usual through the end of December.
As Reuters notes, analysts forecast that the amount of gas in storage is 8.7 percent above standard for this time of year. Nevertheless, liquefied natural gas (LNG) export plants continue to receive record volumes of feedstock.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 1.8% to settle at $2447 per million British thermal units.
Record production and ample gas in storage has weighed on its prices for weeks, prompting some traders to forecast that prices this winter (November-March) have already peaked in November. Looking ahead, analysts project U.S. gas prices and demand will rise in coming years as new LNG export plants enter service in the U.S.
According to the latest data, European consumers have significantly increased daily volumes of gas extracted from underground storage facilities (UGS). Particularly high growth was noted in France, Italy, the Netherlands and Germany, as shown by Gas Infrastructure Europe (GIE) statistics.
Gas reserves in EU UGS reached 88.35% as of the morning of December 19. This is 11.5 percentage points higher than the average level over the past five years and 4.5 points higher than last year.
Natural gas prices are currently forming a downtrend on the H4 timeframe. The price is aiming for the yearly low at 1,943. The Bears Power indicator volumes (standard values) are staying in the negative zone, indicating a selling bias.
Short-term prospects for natural gas suggest selling.
The target is at the level of 2.000.
Part of the profit should be taken near the level of 2.000.
A stop-loss could be placed at the level of 2.555.
The bearish trend is short-term, so trade volume should not exceed 2% of your balance.