At the start of the week, natural gas (NG) was trading at $3.770, down 3.7% from last Friday. This drop came ahead of the inauguration of Donald Trump, who plans to lift the moratorium on approving new liquefied natural gas (LNG) export projects, causing prices to fall from $4.287 to $3.904. Expectations of increased US LNG shipments are adding supply to the market and increasing pressure on prices.
At the same time, frosty weather in January increases heating demand, which may slow or temporarily halt gas production and processing in some regions. Earlier, there was an increase in the CFTC's net speculative positions in natural gas, which may also contribute to higher prices. In addition, the dollar index has been declining since early Monday, which may enhance the attractiveness of US natural gas in international markets.
As spring approaches, the traditional decline in gas prices is expected. However, the decline could be limited by increased consumption. According to Bernstein analysts, consumption will increase by 30 billion cubic feet per day by 2030. Overall, weather remains an unpredictable factor and if February and March are cold, this could lead to lower inventories and additional demand in the market.
The next event to influence prices will be the release of US natural gas reserves data on 23rd January.
Technical analysis suggests a correction in the price of NG after reaching a new high. Currently, the cost of NG is showing a decline from the recent high, and has formed a red candlestick. In the short term, the NG price correction is likely to continue, and a bearish trend is likely to begin.
Current recommendation:
Sell at the current price. Take profit - 3,539. Stop loss - 3,904.
This content is for informational purposes only and is not intended to be investing advice.
