U.S. natural gas prices have rebounded from their mid-December lows. The rebound was rather modest, but even the very fact of breaking the medium-term downtrend is important. Attempts of growth are still limited to the range of 2.5–2.55, and the bulls need to consolidate above these levels to intercept the initiative. The news background on the gas market may contribute to this.
Analysts are assessing the impact of the U.S. restrictions on the Arctic LNG-2 project of the Russian Novatek. If the facility's launch is delayed, the global LNG market risks missing 30% of the expected increase in supply in 2024. Arctic LNG-2 has already started operating, but the extent of future problems will remain largely unknown until the first sale of fuel is made.
Meanwhile, the European gas market is slowly experiencing the consequences of a new wave of geopolitical tensions in the Middle East. At yesterday's trading session, gas prices surged by 6%. Some fuel suppliers have already changed ship routes. The delivery time of LNG to final consumers may now increase by several weeks. According to Bloomberg, only 30 oil and gas tankers passed through the Red Sea last week. This is 40% less than the average for the previous 3 weeks.
As for the U.S., fuel demand is expected to rise as temperatures drop in late December and early January. This may result in gas consumption increasing by more than 10% as early as next week. The end of the Christmas and New Year holidays traditionally leads to a significant rise in demand for commodities.
From the technical point of view, there are two main factors favoring the growth of gas prices, namely the breakout of the downtrend from the early November highs and the RSI upward reversal from the oversold zone. Traders may make another attempt to break above the 2.5–2.55 levels in the coming days.
Consider the following trading strategy:
Buy gas at the current price. Take profit 1 – 2.5. Take profit 2 – 2.55. Stop loss – 2.35.
Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion
This content is for informational purposes only and is not intended to be investing advice.
