- Spot natural gas prices (CFDS ON NATURAL GAS) settled on a decline in recent trading at intraday levels, to achieve slight daily gains.
- Until the moment of writing this report, prices rose by 0.41%, to settle at $8.826 per million British thermal units.
- During yesterday’s trading prices fell by -1.70%, while last week the price fell by -4.59%.
Natural gas prices in Europe rose more than 30% on Monday, after Russian exports via Nord Stream 1 remained suspended, while no date was set for re-flows.
The pipeline was supposed to reopen on Saturday after a maintenance period, but Russia said technical problems forced it to stay shut. European leaders have raised concerns that Russia will cut supplies in response to sanctions imposed on it following the invasion of Ukraine last February.
While natural gas prices are still below the peak seen last month, rising energy costs increase the potential for a crisis when it is used for heating in the approaching winter. Governments are trying to allay fears, but monthly bills are set to rise, crippling the European economy in the next few months. This is hitting stocks and pushing the Euro to a 20-year low.
The Nord Stream 1 pipeline was only operating at about 20% of its capacity before Russia shut it down on Wednesday, citing the need for repairs. Late Friday it announced that it would not resume flows as planned. France said last week that Russia was trying to use Europe's dependence on its energy as a "weapon of war".
Unlike oil, natural gas markets are more regional than global because transportation costs are much higher. However, prices in the UK, which does not import gas directly from Russia, rose more than 30% on Monday and have more than quadrupled this year.
Dutch forward month futures for the European natural gas standard traded 31% higher at €281 per megawatt-hour on Monday. That compares with less than 50 euros last year. Some futures contracts briefly rose to nearly 1,000 euros in late August.
The crisis in Europe is also affecting the United States, which exports some natural gas in the form of liquefied natural gas. Henry Hub prices have risen by about 150% since the beginning of the year.
Natural Gas Technical Analysis
Technically, natural gas is trying to search for a bullish bottom to take as a base that might help it gain the necessary positive momentum to regain its recovery and rise again. This happened after testing the 9.600 resistance level and then consolidating on a higher one, which forced it to rebound lower, considering the control of the main bullish trend in the medium term. And the short is aligned with a slope line, as shown in the attached chart for a (daily) period, with the positive pressure of its trades continuing above its simple moving average for the previous 50 days.
In addition, we notice that the relative strength indicators have reached very oversold areas, in an exaggerated way compared to the price movement. This suggests the start of what is known as positive divergence, and this increases the positive pressure on the price during its upcoming trading.
Therefore, we expect the rise of natural gas to return with its upcoming trading in the short term, to target again the pivotal resistance level 9.600, in preparation for attacking it
Ready to trade our FX Natural Gas analysis today? We’ve shortlisted the best commodity brokers in the industry for you..