Natural Gas Technical Analysis: Price Rises Amid War Concerns
Spot natural gas prices (CFDS ON NATURAL GAS) rose during the recent trading at the intraday levels, to achieve new daily gains until the moment of writing this report, by 0.54%. It settled at the price of $5.198 per million British thermal units, after rising by 3.92% in yesterday’s trading.
Global supply challenges amid the continuing fallout from the Russian invasion of Ukraine and spillovers in the United States led to domestic natural gas prices rising for the third consecutive session on Wednesday, as NYMEX gas futures for April rose about 4.5 cents a day and closed at $5.232 per million British thermal units.
U.S. liquefied natural gas exports topped 14 billion cubic feet Thursday, according to a preliminary NGI estimate, the third time in a week that volumes approached a record. As Russia’s month-long war in Ukraine relentlessly erupts, the United States and the European Union have imposed new sanctions on Russia, possibly including its natural gas sector.
European countries have pledged to rely on other sources to replace Russian energy, as the continent remains dependent on Kremlin-controlled supplies for more than a third of its natural gas needs and is increasingly calling for liquefied natural gas to help offset that dependence.
European Commission President Ursula von der Leyen told EU lawmakers on Wednesday that she plans to meet with US President Biden to talk about “how to prioritize delivery of LNG from the US to the EU in the coming months,” according to the Associated Press. “We aim to commit to providing additional supplies for the upcoming winter.”
The European Union is also considering requiring natural gas storage facilities to fill at least 80% of their capacity next winter. Given that European supplies are below historical averages, this will almost certainly keep US LNG demand high through 2022.
President Biden is set to meet with European Union and NATO leaders in Brussels on Thursday to assess how to counter Russia’s attack on Ukraine. More sanctions against Russia and the possibility of EU members joining the US ban on Russian energy imports were reportedly on the table, sparking positive sentiment on Wednesday in natural gas markets.
Meanwhile, Russian President Vladimir Putin announced Wednesday that Russia will demand “unfriendly” countries to pay for Russian natural gas exports in rubles only from now on. The Russian president did not say when exactly the new policy would take effect, instructing the country’s central bank to set up a procedure for natural gas buyers to get rubles in Russia.
Technically, natural gas continues to rise, supported by its trading above its simple moving average for the previous 50 days, and under the control of the main bullish trend in the medium term along a slope line, in addition to the influx of positive signals on the relative strength indicators, despite reaching overbought areas.
Therefore, our positive expectations surrounding the index remain in place, as we expect more rise during its upcoming trading, as long as its stability is above 4.954, to target the first resistance levels at 5.710.