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.
Natural gas prices rose for a second day as traders digested on Tuesday a positive shift in weather forecasts and record demand for US LNG exports. Nymex natural gas futures for April gained 28.7 cents a day and settled at $5.187 per million British thermal units. The May contract rose by 29.3 cents to settle at $5.227 per million British thermal units.
Bloomberg estimates showed that production in the United States reached 95 billion cubic feet on Tuesday, recovering from the freezes that led last week to halt production to reach its time at about 93 billion cubic feet. Continued demand for LNG exports amid supply shortages in Europe during the Russian invasion of Ukraine continues to drive bullish market sentiment.
Europe is partially dependent on Russian gas delivered through Ukraine, although the continent has vowed to try to find other alternatives from Russian supplies, which has led to an already strong demand for US LNG after a winter in which stocks in Europe have fallen.
Moreover, the United States banned Russian energy imports earlier this month, and the European Union imposed a series of harsh economic sanctions on Russia. The Wall Street Journal reported that it was considering a Russian oil embargo on Tuesday, as European Union members increased their protests against the war, and the United Kingdom had already imposed a ban on Russian crude.
Germany has invited other EU leaders to a meeting in Brussels on Thursday. The meeting will take place in conjunction with President Biden's discussions with NATO leaders on how to counter Russia's attack on Ukraine.
Technically, the price managed in its recent trading to breach the resistance level of 4.954. This is due to the dominance of the main bullish trend in the medium term along a slope line, as shown in the attached chart for a (daily) period, with the continuation of positive support for its trading above its simple moving average for the previous 50 days. It benefits from the influx of positive signals on the RSI indicators, despite reaching overbought areas.
Therefore, our expectations indicate more rise for natural gas during its upcoming trading, as long as it stabilizes above the level of 4.954, to target the first resistance levels at the price of 5.710.
