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

Executive Moves

Montenegro approves Do Kwon’s extradition to US

Do Kwon, the former CEO of cryptocurrency startup Terraform Labs, is reportedly facing extradition to the United States to face fraud charges. Kwon has been imprisoned in Montenegro since March, and Montenegro’s Justice Minister Andrej Milovic is expected to make a formal decision on the extradition on December 20.

Institutional FX

Marex seeks US listing following failed UK IPO, eyes $2.8B valuation

London-headquartered commodities broker Marex has kicked off plans for a US listing, opting against a London public float after a failed attempt two years ago.

Retail FX

ThinkMarkets IPO scrapped as SPAC merger falls through

Canada-listed blank check company, FG Acquisition Corp., and Melbourne-based broker ThinkMarkets have jointly decided to call off their previously announced merger plan.

Retail FX

Exness trading volumes slow down in November, dip below $4B mark

FX brokerage powerhouse Exness reported a double-digit decrease in its trading volumes for the month of November 2023 as the market environment stabilised following a period of high volatility.

Executive Moves

iGaming veteran Breon Corcoran replaces June Felix as IG CEO

Spread betting and CFDs broker IG Group plc today announced the appointment of Breon Corcoran, the former chief executive of Paddy Power Betfair, as its new CEO, effective from January 29, 2024.

Retail FX, Reviews

A Guide to Forex Trading and Quotex App Download for PC

Trading in financial markets presents a great opportunity for profit. One of the popular choices nowadays is foreign exchange trading, also called Forex or FXm which involves buying and selling national currencies to make a profit. 

Digital Assets

Tokensoft and Chainwire Form Partnership to Boost Crypto PR Outreach

Through this partnership, Tokensoft leverages Chainwire’s expansive PR platform, enhancing its global reach within the cryptocurrency community and ensuring coverage for its token distribution, claims, and fundraising campaigns.

Digital Assets

No escape for Binance’s CZ: Court blocks travel before sentencing

A federal judge in Seattle has ruled that Chanpeng Zhao, the former CEO of Binance, is not permitted to return to his home in the United Arab Emirates before his sentencing in the United States, set for February.

Digital Assets

FINMA-regulated digital asset provider Taurus expands into Germany

This expansion follows recent moves by BaFin to accelerate the licensing of crypto custody services, aiming to boost market confidence. Following this, several new licenses were issued, notably to Commerzbank, making it the first full-service financial institution in Germany to receive a crypto custody license.