Natural Gas Technical Analysis: Price is Soaring

Spot natural gas prices increased in recent trading at intraday levels, to achieve new daily gains until the moment of writing this report, by 0.71%. It settled at the price of $8.852 per million British thermal units, after rising during yesterdays trading by It reached 5.99%.

Russia is tightening the amount of its natural gas exports to Europe, and this is causing prices to rise around the world. Russia's Gazprom said on Monday that it will cut natural gas shipments from the main Nord Stream pipeline to Germany starting this week, and the company said that exports will be reduced. The pipeline has been reduced to 20% of its capacity, down from 40%, due to a sanctions issue with turbines servicing the pipeline.

Natural gas prices rose in Europe as the Dutch benchmark TTF rose 12% to $179 per megawatt-hour. In the US, natural gas futures rose 5.2% to $8.73 per MMBtu, the European price after conversion is around $52 per MMBtu, which is a massive increase over US prices, reflecting the fact that Europe has to import Most of its gas is natural and needs to be converted to liquefied form.

Russia's latest move, which European importers suspect is politically motivated given Europe's support for Ukraine in gas markets, is likely to lead to months of turmoil. Europe is importing more natural gas from elsewhere this year, but its storage levels remain low, as European consumers rely on gas for winter heating, and gas is an increasingly important source of electric power.

Without Russian supplies, Europe will likely need to conserve energy and import more gas from elsewhere.

Natural Gas Forecast

Technically, natural gas continues to rise along an ascending trend line in the short term, as shown in the attached chart for a period of time (daily), and the price rise comes despite the RSI reaching overbought areas, supported by its continuous trading above its 50-day simple moving average.

Therefore, our expectations indicate the continuation of the rise of natural gas during its upcoming trading, as long as the support 8.054 remains intact, to target the pivotal resistance level 9.600.