On Thursday, natural gas prices have stabilized near a two-month high of $2.995.
Last week’s surge in prices was driven by production cuts and higher than expected demand forecasts in the United States. Hurricane Helene aftermath and uncertainty regarding energy production in the Gulf of Mexico provided additional support for the prices. Despite efforts to build up inventories ahead of winter, the volumes of gas pumped into storage remain lower than usual, increasing the risk of price fluctuations.
In Europe, the cost of gas has also increased, two to three times higher than historical norms. Market volatility persists as the heating season approaches, with forecasts of colder weather in a number of European cities in October raising concerns.
Moreover, the European market remains vulnerable to supply disruptions. Some liquefied natural gas (LNG) traders opt to pay penalties for canceling shipments to Germany and redirect cargoes to Asia, where higher demand provides better margins. BloombergNEF estimates that US LNG exports in the coming months will be more profitable for Asian markets than for those in Europe.
To minimize the risks of shipment diversion, Germany has added diversion charges to its contracts of up to 1% of the LNG price. Likewise, terminal operators continue to impose regasification fees even if deliveries are canceled.
On a technical level, natural gas prices are forming a broad upward correction on the D1 timeframe. In terms of wave analysis, the price is forming the third ascending wave. Breaking through the top of the first wave at 3,150 will strengthen the upward movement. Bulls Power and Bears Power indicators (standard values), which remain in the positive zone, confirm the strength of bullish sentiment.
Signal:
The short-term outlook for natural gas is to buy.
The target is at the level of 3,385.
Part of the profit should be taken near the level of 3,150.
A Stop Loss is placed at the level of 2,650.
The bullish trend is of a short-term nature, so it is worth selecting a trading volume of no more than 2% of your balance.
