Natural Gas Price Eyes $2.00 Amid Supply Drop & Cold Snap Impact
Natural gas (NG) has shown bullish momentum and hit an intraday high around the 1.9095 level. However, the reason for its upward trend
Natural gas (NG) has shown bullish momentum and hit an intraday high around the 1.9095 level. However, the reason for its upward trend can be attributed to the report suggesting that the global weekly LNG supply fell by 13% for the week of February 26 compared to the previous week.
Furthermore, the drop in temperatures below the 10-year average in China and Europe suggests increased demand for heating, likely driving up the price of natural gas (NG).
Hence, the higher demand for NG for heating purposes could lead to a surge in prices due to constrained supply, impacting energy markets and consumer costs.
In contrast to this, low demand in Europe is causing a surplus of gas cargoes, with around 3 million metric tons stranded at sea for over 20 days, far more than usual. This surplus could lead to a decrease in natural gas prices due to an oversupply in the market.
Moreover, the bullish US dollar was seen as another key factor in increasing the prices of commodities like natural gas. Additionally, cautious market sentiment and statements from the Federal Reserve suggesting no immediate interest rate cuts can also impact commodity prices.
Impact of Declining Gas Exports on Natural Gas Prices
It is worth noting that gas exports are dropping rapidly, as shown in a recent Bloomberg report. Both the US and Qatar experienced a nearly 13% decline in output during the last week of February compared to the previous week.
The main challenge for the US is the unexpected shutdown of Cove Point LNG, leading to a significant reduction in output. According to the weekly Bloomberg report, global LNG supply fell by 13% for the week ending February 26 compared to the previous week.
Therefore, the declining gas exports, particularly due to the unexpected shutdown of Cove Point LNG in the US, could boost natural gas prices, as global LNG supply fell by 13% for the week ending February 26.
Impact of Powell’s Comments on Natural Gas Demand and Prices
On the US front, Jerome Powell’s comments on inflation and interest rates could impact natural gas demand. If he hints at higher rates, it might lower demand due to increased asset costs.
Investors anticipate a rate cut in June, but Powell may stress that cuts are unnecessary unless there’s an economic downturn. Atlanta Fed President Bostic notes that a strong labour market gives the Fed time to evaluate rate decisions.
Jerome Powell’s comments on inflation and interest rates could affect natural gas demand, lowering prices if he suggests higher rates but indicating stability if he stresses that rate cuts are unnecessary.
Natural Gas Price Forecast: Technical Analysis
In the latest trading session, natural gas experienced a slight decline of 0.56%, closing at $1.9620. Positioned slightly below its pivot point at $1.9971, the commodity is at a pivotal stage.
If it fails to cross above this level, we might see a continued downtrend with immediate support levels at $1.9475 and further down to $1.9078 and $1.8573, indicating potential areas of stabilization.
Conversely, overcoming resistance at $2.0355, followed by higher thresholds at $2.0758 and $2.1089, could signal a shift towards a bullish trajectory.
The RSI indicator at 62, coupled with the 50-day EMA at $1.8699, suggests that natural gas retains a bullish potential above $1.9475, with the potential for further gains if it maintains above this critical support level.
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