Buying natural gas with target of 3,400 amid rising global demand

Natural gas prices stabilized on Thursday after rising by 3% the day before. The main growth factor was a change in the US Energy Information Administration's (EIA) forecast for gas production.

According to the EIA's projections, natural gas output will decline from a record high of 103.8 billion cubic feet per day (cfpd) in 2023 to 103.3 cfpd in 2024. The agency suggests several producers may cut back on drilling this year after monthly average prices for the energy commodity slumped to a 32-year low in March at the Henry Hub.

EIA also forecasts domestic gas consumption to rise from a record high of 89.1 billion cfpd in 2023 to 90.0 billion cfpd in 2024.

In the meantime, the European Union (EU) has increased its imports of Russian liquefied natural gas (LNG) in recent months. This raises the probability of exceeding import volumes in 2024 compared to 2023. Russia remains the EU's second-largest LNG supplier after the US.

Gas withdrawals from European underground storage facilities (UGS) increased significantly in early November 2024 in the face of colder temperatures and reached the third highest level for November ever recorded. As a result, storage reserves have fallen to 93%, according to Gas Infrastructure Europe. This supports gas prices in Europe.

At the technical level, natural gas prices are forming an upward trend on the D1 timeframe. The Bulls Power and Bears Power indicators (standard values), remaining in the positive zone, show strong bullish sentiment.

Signal:

The short-term outlook for natural gas suggests buying. 

The target is at the level of 3.400.

Part of the profit should be taken near the level of 3.090.

A stop-loss could be placed at the level of 2.630.

The bullish trend is short-term, so a trading volume should not exceed 2% of your balance.