Natural gas price falls despite the start of the heating season

07 December 2023 138
Natural gas price falls despite the start of the heating season

Natural gas prices are plummeting this week due to low demand. The use of gas in the U.K. and the largest economies in the European Union has fallen by 21% since the beginning of 2023.

 

Nevertheless, the decline is slowing markedly on European exchanges. After Tuesday's lows, gas prices in Europe rebounded significantly, rising 2.6% by the end of Wednesday's trading session. According to the London ICE exchange, prices approached the level of $440 per thousand cubic meters.

 

Gas prices fell 8% the previous day, hitting two-month lows. Analysts at Energi Danmark forecast lower gas demand due to an anticipated rise in temperatures this week in Europe. The region's extensive natural gas reserves in underground storage facilities, which are almost 95% full, reassure market participants.

 

Meanwhile, Technavio has launched a new report forecasting key segments of the liquefied natural gas (LNG) market from 2024 to 2028. According to Technavio, the natural gas liquids (NGLs) market is expected to grow by $19.62 billion (+6.47%) from 2023 to 2028, supported by increased demand for renewable energy. However, factors such as increasing environmental concerns could still limit growth.

 

The industrial segment is estimated to witness significant growth during the forecast period. Natural gas liquids are a major feedstock for petrochemical production. This could affect the price of the energy carrier.

 

Natural gas price has moved out of the correctional channel on the D1 timeframe. The nearest support is at the level of 2.300.

 

The Bears Power indicator (standard values) is falling further in the negative zone, indicating a move towards support. An inconsistency in fundamentals could hold the decline near the mentioned level, especially with the start of the heating season in the northern hemisphere.

 

Signal:

The short-term natural gas outlook is to sell.

The target is at the level of 2.050.

Part of the profit could be fixed near the level of 2.345.

A Stop-loss could be placed at the level of 3.030.

 

The bearish 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.

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