Natural gas prices in the US are sparking a new wave of growth this week. Yesterday, the price broke the June high at 3.15, and today it moved close to the January highs and the level of 3.4. Yet the potential for a further increase in gas prices is far from being exhausted. The next bullish target may well be the level of 3.6, near which the highs of the fall of 2023 are located. Gas market fundamentals are now providing significant support to buyers.
According to Morgan Stanley analysts, the US gas market is poised to enter a new cycle of demand growth, the main drivers of which will be rising LNG exports and increased electricity consumption. Gas inventories in the country are still above seasonal averages, but in the first months of 2025, the surplus may completely disappear. Morgan Stanley expects US gas prices to rise to $3.75 per million British thermal units.
During the heating season, the US may face a shortage of gas supplies, Wood Mackenzie representatives say. Demand is increasing while production remains unchanged or declines. The planned expansion of storage capacity by 50 billion cubic meters will further increase demand for gas to ensure the country's energy security.
Reuters experts also draw attention to the huge difference in gas prices between Europe and the United States. In recent weeks, the spread between them has grown by more than 30% and continues to widen. Under such conditions, US LNG producers are actively seeking to sell their products to the EU countries, as the feedstock is 80% cheaper than market prices for liquefied fuel. An active increase in LNG exports from the US will be a significant factor in supporting domestic gas prices.
Despite the rapid growth of prices in recent days, the RSI indicator remains far from the overbought zone. In this regard, gas prices have a good chance to reach the levels of 3.4 and 3.6 before a corrective pullback.
Consider the following trading strategy:
Buy gas at the current price. Take profit 1 – 3.4. Take profit 2 – 3.6. Stop loss – 3.15.
This content is for informational purposes only and is not intended to be investing advice.
