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Natural Gas Price Stabilizes As European Markets Rally At The Opening

By:
Vladimir Zernov
Published: Aug 24, 2022, 06:35 UTC

Freeport LNG will not resume operations until late November, so European natural gas markets are moving higher.

Natural Gas

In this article:

Key Insights

  • Natural gas markets have calmed down after yesterday’s sell-off. 
  • Freeport LNG will not work until late November, so European natural gas markets are gaining ground at the opening. 
  • Natural gas is stuck in a wide trading range, and the risks of a downside breakout are increasing. 

Freeport LNG Restart Is Delayed Until Late November

Natural gas prices have stabilized near $9.35 as traders evaluate the recent news from Freeport LNG. The LNG producer stated that it would return 85% of the production by late November. Full production levels are expected to be achieved by March 2023.

Previously, traders expected that Freeport LNG would resume partial operations in October. The news is bearish for the domestic market as more natural gas will stay inside the country instead of being exported.

Not surprisingly, European natural gas markets are moving higher at the opening. For Europe, additional problems at Freeport LNG are bad news. The current supply from Russia is limited, and it remains to be seen whether Russia will be willing to supply any natural gas in winter in case the relations between Russia and EU deteriorate further.

At this point, the only potential bearish catalyst for natural gas prices in Europe is the closure of natural gas consumers who cannot afford high prices. However, this catalyst may be in play in the longer run. In the short term, European countries need natural gas to fill their storage ahead of the heating season, so demand will stay elevated.

It will be interesting to see whether the continuation of the rally in the European markets will provide psychological support to the U.S. markets. The developments at Freeport LNG are clearly bearish for domestic markets, but traders may need additional catalysts to push prices to lower levels.

Natural Gas Is Stuck In The $9.00 – $10.00 Range

Natural Gas

Natural gas prices failed to settle below the support level at $9.00 and are trying to get back above $9.35. From a big picture point of view, natural gas is stuck in a wide range between the support at $9.00 and the resistance at $10.00.

The resistance at $10.00 is strong, and natural gas will need significant catalysts to get above this level.

As Freeport LNG will not operate until late November, the risks of a downside breakout are increasing. In this scenario, natural gas will settle below the $9.00 level and test the 20 EMA at $8.75. A move below the 20 EMA will signal that a new bearish trend is emerging.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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