• Wed. May 22nd, 2024

Prices for Natural Gas Are Being Pushed Down by Steady Amounts and Less Demand

Leon Kramer

ByLeon Kramer

Oct 24, 2023

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  • The recent performance of Natural Gas prices has shown a positive trend, coinciding with the robust performance of US Retail Sales. 
  • The US Dollar exhibits strength in response to the positive development of US Retail Sales. 
  • The current state of natural gas prices in the United States indicates a positive trend. 

Natural gas prices have rebounded, returning to a positive trajectory, primarily due to the positive impact of US Retail Sales figures. The figures exhibited a positive trend, surpassing initial projections and reflecting substantial improvements compared to the previous month’s revised data. The statistics above present a discrepancy in the statements made by two prominent financial institutions in the United States before the commencement of trading activities. 

In the current market conditions, it is noteworthy that the United States Dollar (USD) has exhibited a reversal of its previous negative performance and is now displaying a positive trajectory. The reason above pertains to the earnings of US banks, accompanied by an additional warning issued regarding the US consumer. The observed increase in defaulting loans and credit card delinquencies may indicate the initial indications or presence of an economic downturn within the United States. 

The current market value of Natural Gas stands at $3.42 per MMBtu as of the time of composing this statement. 

Recent Events and Developments About Natural Gas

  • The current trend in European gas prices indicates a decline, which can be attributed to the vigilance of traders anticipating Joe Biden’s forthcoming visit to Israel on Wednesday. This proactive approach aims to mitigate any potential exacerbation in the regional situation. The cumulative decrease in European gas prices since the previous week is 40%. 
  • The recent escalation in gas prices within the United States can incentivize a transition towards using fuel oil as an alternative energy source. 
  • The demand for gas in Europe continues to exhibit a subdued state, as gas inventories have reached 98% capacity.
  • According to data provided by Gassco, the gas flow directed towards Northern Europe and the United Kingdom is currently within the expected range of average levels. 
  • It has been announced that the Suez Canal intends to increase transit fees from 5% to 15%, specifically for LNG and LPG carriers navigating the strait. 

Technical Analysis

The natural gas market is currently experiencing a modest attempt to reduce previous losses. However, the prevailing European gas prices suggest that further challenges lie ahead for the American gas market. The possibility of specific upward movements in the Middle East remains feasible, albeit without a definitive indication of a sustained upward trajectory. Given the anticipated moderate temperatures and the sufficient gas supply in European and American storage facilities to meet winter demands, focusing on the potential activation of lower levels is advisable.

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Given the significant ascent and subsequent breach beyond the established trend channel, it is imperative to emphasize the pivotal role of the upper boundary of said trend channel in assuming a supportive function. No notable resistance levels are observed, except the peak on January 17, which stands at $3.65. Subsequently, the pinnacle reached in 2023 at approximately $4.3080 assumes significance.

One potential drawback is that the trend channel must function as a support level near $3.30. In the event of a possible breakdown, it is plausible that Natural Gas prices may experience a decline to approximately $3.07. This projection is based on identifying a discernible orange line corresponding to the double-top formation observed around mid-August. In the event of a potential expansion of the decline, prices may experience a downward trajectory, potentially reaching levels below $3 and approaching the vicinity of $2.85, which aligns with the 55-day Simple Moving Average.

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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