Natural Gas Prices Remain Under Pressure and Could Reach 2016 Lows – Guest Editorial

Alejandro Zambrano

ATFX Chief Market Strategist Alejandro Zambrano looks at natural gas prices, concentrating on supply and demand over recent months.

Gas Supplies

Written by Alejandro Zambrano, Chief Market Strategist, ATFX.

Since November 2019, natural gas prices have been under pressure and have declined by 34.83%. The main reason for prices trading lower is that the market suffers from oversupply.

Since crude oil producers started to use fracking to extract crude oil from places that before were not profitable, they have also been finding natural gas as a by-product. However, they are not interested in natural gas, and sometimes, producers have found it cheaper to burn the gas instead of selling it, as they need to pay to get the gas to the market.

The problem with oversupply is not only a US problem; it is a global issue with oversupply in Europe and Asia.

Mild temperatures this winter have also pressured the price since November 2019, while the coronavirus outbreak also affected the demand for natural gas. The downward momentum accelerated after the price pierced below the 100-day moving average in December, while the coronavirus impact was felt in the natural gas markets after January.

However, in the last few days, natural gas prices managed to bounce after the Fed cut interest rates. The markets are currently pricing in more central bank rate cuts, and natural gas prices turned higher as the interest rate cuts might support the natural gas demand.

Natural Gas Price Technical Outlook

The technical outlook is bearish, and the price is trading below a descending trendline that started last November. The first signs of the market price turning higher would be if the index trades above the falling trendline. However, to indeed turn bullish, the price needs to take out the February 2020 high of 2.036, as long as the price remains in a downtrend, the price might be able to reach the 2020 low of 1.6747, followed by the 2016 low of 1.578.

Daily Chart

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next

Digital Assets

Revolut receives FCA’s go-ahead to launch crypto trading

British fintech and banking firm Revolut has received a regulatory go-ahead to launch its cryptocurrency services in the UK.

Digital Assets

GBTC share is trading at 36% below bitcoin spot price

Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund, the highest margin ever since its debut in 2013. Digital Currency Group’s flagship GBTC shares traded at a discount of 35.8% to net asset value (NAV) today.

Digital Assets

Crypto lender Nexo investigated by 8 US state regulators

State securities regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont are investigating crypto lender Nexo for allegedly failing to register its Earn Interest Product.

Metaverse Gaming NFT

Astar Network’s ad features 329 top brands to support Web3 in Japan

Blockchain innovation hub Astar Network is making strides in promoting the Web3 adoption worldwide. In yet another milestone, the smart contracts platform has run a national newspaper ad in Japan that set a new global record with participation from 329 blue-chip firms.

Digital Assets

Pyth Network welcomes onchain data from crypto market maker Auros

“By sharing our high-frequency trading data with a truly onchain decentralized network, we aim to foster innovation that will lead to better financial solutions for all participants.”

Digital Assets

Tokeny integrates Ownera to boost liquidity of tokenized assets

“The adoption of FinP2P will result in higher liquidity and better access to capital and assets by providing regulated firms with one secure point of connection to multiple digital asset networks across the globe.”

Digital Assets

BingX launches subsidy vouchers to cover user losses in copy trading

“With the introduction of copy trade subsidy vouchers, new users can easily try out trading strategies without incurring losses.”

Digital Assets

Talos expands sales team: Frank van Zegveld, Matt Houston, Hillary Conley

“The extensive leadership and industry expertise of these new hires will enable us to build long-lasting relationships as we continue to build out our global presence in EMEA and beyond.”

Executive Moves

FX and CFD broker Emporium Capital hires industry veteran Robert Woolfe as COO

His past experience within the FX and CFD industry includes top roles at Capital Index, London Capital Group, GKFX, ETX Capital, and IG.  “I’m delighted to be part of the Emporium Capital team and spearheading the brokerages global expansion plans”, he said about the appointment.