Natural Gas Resumes Uptrend As Russian Gas Gets Cut Off
Natural gas has bounced off October's high which has turned into support, as the chess game between Russia and the EU continues
trendNatural gas turned bullish in summer last year, which is not the time for gas prices to go up since the northern hemisphere is in the summer time and not much gas is used for heating. Yet, gas kept increasing and by October it reached $6.50, although we have seen much higher prices before. we saw a pullback by the end of the year, as gas prices fell to $3.50, but the bullish trend resumed again and gas prices increased to $8.05 as the conflict in Ukraine increased uncertainties.
After sanctions from the US, Russia started demanding to be paid in Rubbles for its gas exports. Some countries have accepted the demand while others are refusing it, so the cut-off has begun. Four European gas buyers are said to have already paid for supplies in rubles. Ten European gas companies have opened accounts at Gazprombank in order to meet Russia’s demand to pay in rubles. As per the headline, four have already done so.
Although, Bulgaria’s energy minister confirms that Gazprom has halted physical gas flows to Bulgaria. Poland has also been cut off. Do take note that transit supplies (since Poland and Bulgaria are considered ‘transit states’) will continue as they are but in the event that there is any “stealing”, then Gazprom will reduce said supplies by the amount taken away. Germany is thinking about halting gas imports from Russia.
Remarks by the German Economy Ministry
- Germany says coordinating closely with EU on Russian gas supply cut-off
- The German gas crisis team has not identified any gas supply bottlenecks so far
- Concerned that Russian gas supply to partner countries has stopped
Well, it’s not likely Germany will be on the chopping block just yet as that will be the ace card for Russia to play in this game of poker. But given the situation, it’ll be vital to keep an eye on the developments here in the days/weeks to come.
Natural Gas Daily Chart – Gas Bouncing Off the 20 SMA
The October high turned into support for natural gas
So, gas prices surged above $8 last week, but we saw a pullback later on and the price retreated to $6.50, which was the high from October. That level turned from resistance into support now and natural gas bounced off that level. Now it is trading at around $7.20 so buyers are in charge again and we will probably see gas above $8 again son.
Natural Gas Live Chart
[[Gas-graph]]
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