The summer is over once again and we can brace ourselves because “winter is coming” indeed.
The next thing we see is the Santa Claus rally but one of the most-watched commodities in the colder months of the year is natural gas. As you all know, it is used for heat production and therefore needed more during “chilly” times, bigger consumption is obvious, with that comes a higher price for almost every year. Every person watching the commodity market is well informed about that and it makes natural gas a very interesting harbor for their money.
These days, we finally see more and more countries which ban coal and are switching to natural gas. According to the EIA statistics (Energy Information Administration) between 2009 and 2015 was 20% of electricity in the USA made from natural gas. EIA’s future prediction is that 80% should be made from natural gas and that leads us to one interesting point, rising demand of course.
Last year (2018) the demand rose by 4.6% in general, and in China, it rose by a stunning 18% because they are trying to reduce the air pollution that they already have (finally). China, in particular, is supposed to be the leader in rising demand for the next 5-6 years.
You never know what could happen in the markets and especially on commodity markets so it is better to be careful, nevertheless we can obviously see more signals for the price of natural gas to rise more than usual. This means you should be watching the market for at least September and October because these two months are statistically the best for natural gas prices.
Some technical things should come in handy, so the really tough support is that we should expect the round number of 2.00 USD, the resistance is somewhere around 2.50 USD. Recently, it has been breached and continues to serve as a support. From the start of September, we can see a 20% increase in natural gas prices. After the attack on Saudi Arabia’s oil fields, the chart made a little gap (64 points) and went for a bigger correction leaning back to the previously mentioned resistance/support, from where it could bounce back to its uptrend.
-written by Wade Rolson
Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual.
Purvis, D. (2019). Natural Gas Prices Poised For Dramatic Price Increase | OilPrice.com. [online] OilPrice.com. Available at: https://oilprice.com/Energy/Gas-Prices/Natural-Gas-Prices-Poised-For-Dramatic-Price-Increase.html [Accessed 29 Aug. 2019].
Birol, F. (2019). Gas 2019: Key Findings. [online] Iea.org. Available at: https://www.iea.org/gas2019/