US natural gas price near $1.8/MMBTU barrier because of low demand forecasts📉
Gas prices continued their strong pullback during today's session, losing more than 3% during European morning hours. Yesterday, US inventory data showed a 75 bcf decline in stocks, which was in line with expectations but small for the winter period. This shows that demand remains low and further reports may bring equally small declines.
Earlier this week there was a cooling outlook for the second half of February, but we are now seeing a slight reduction in temperature drop expectations. The key region, the Midwest, is expected to experience standard temperatures.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
Gas is approaching support at $1.8/MMBTU. It is worth noting that seasonality shows a potential local low. A potential cooling in the second half of February could lead to a similar price increase to last year, although it is worth noting that at that time, following a local low on the seasonality indicator, the price then still fell by 20% and reached the vicinity of US$2.1/MMBTU. In addition to this, it is worth noting that in recent months, confirmation of the exit from the downward trajectory was the breakout of the 15-session average. After this average was broken, the price increase was around 20%. At the moment, this average is in the vicinity of USD 2.0/MMBTU. Source: xStation5
Stocks have returned to 5-year highs for the period and it is expected that we should experience new 5-year highs for US stock levels in the coming weeks. Source: Bloomberg Finance LP, XTB
The gas price has had its worst opening in 5 years and the price decline is already 30% (of course, it is important to remember that we have a large rollover in this as well. Without factoring in the rollover, the decline would still be above 15%. Source: Bloomberg Finance LP, XTB
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
