Natural gas prices in the United States started to rise this week, limiting the correction to the level of 2.57. The gas market hasn’t reacted to the results of the presidential election, remaining under the influence of supply and demand fundamentals. Based on this, gas prices have room for upside, and the nearest target for the bulls could be 2.9. Buyers may also target the October high of 3.1.
Despite the approach of winter, the hurricane season in the Gulf of Mexico doesn't seem to be ending. Storm Rafael has once again disrupted hydrocarbon production on offshore platforms. According to estimates by the U.S. Environmental Protection Agency, by now 7% of gas production has been halted. Usually hurricanes don’t affect oil and gas output at this season, but the losses from natural disasters in 2024 will clearly exceed expectations.
Meanwhile, the heating season is starting in Europe. In the first 9 months of the year, the consumption of gas on the continent fell by 7.5%, and the last quarter may drastically change the final result. According to Reuters analysts' estimates, in winter the productivity of solar power plants drops by about 50%, while the demand for gas to generate electricity rises by more than 14%. If this winter temperatures won’t be abnormally high as they were last year, the consumption of energy resources will increase even more.
Against this background, European companies stepped up their LNG purchases. In October, imports of liquefied fuel in the EU increased by almost 18% to 7.5 million tons. In turn, Asian countries reduced LNG purchases by 1.5%, to 24.36 million tons. Nevertheless, in annual terms, the imports of Asian countries jumped by 14.6%. According to Kpler experts, stabilization of prices for liquefied fuel contributes to the growth of consumer activity.
The Stochastic indicator on the daily chart of natural gas came out of the oversold zone and formed a buy signal. From a technical point of view, the price has no obstacles to moving to the level of 2.9.
The following trading strategy can be suggested:
Buy gas at the current price. Take profit — 2.9. Stop loss — 2.57.
This content is for informational purposes only and is not intended to be investing advice.
