Gas prices in the US, having made a timid attempt to grow last week, are gradually returning to their initial positions. Above the level of 1.8, the number of buyers of gas sharply decreased, indicating that there is no expectation of a more significant growth of quotations. The US natural gas market continues to be in a depressed state, and there are still no signals for a sharp change in the situation. In such conditions, the price will tend to the minimum marks of mid-March and the level of 1.65.
Gas reserves in the US continue to set historic highs. According to Reuters' estimates, at the moment, US gas reserves are already 41% higher than usual for this time of year. The end of the heating season will only exacerbate the situation, further reducing fuel consumption. According to LSEG, as the warming weather begins, US gas demand is expected to drop from 113.6 billion cubic feet per day to 109 billion cubic feet per day next week.
A similar situation is taking place in the EU. According to the European Association of Gas Infrastructure Operators (GIE), the EU countries may set a new March record for gas reserves in storage. At the end of last week reserves were filled by 59.18%, the volume of reserves amounted to 65.62 billion cubic meters of gas. If current consumption rates are maintained, by the end of March, storage facilities will be 58.2% full. The last record of 55.84% was set in March 2023.
In general, the global gas market is not meeting expectations of rapid demand growth. Goldman Sachs estimates that LNG supply will grow by 45 million tons annually between 2025 and 2028. Meanwhile, demand growth in recent years has rarely exceeded 20 million tons. If LNG consumption does not increase sharply, producers will face a supply surplus of 50 million tons by 2030.
The Stochastic indicator lines on the daily chart of gas quotes are going down, confirming the strength of the bears. A reversal signal may be received soon, but not before the price reaches the level of 1.65.
The following trading strategy may be offered:
Sell gas at the current price. Take profit – 1.65. Stop-loss – 1.8.
This content is for informational purposes only and is not intended to be investing advice.
