Gas and oil under pressure amid recession and demand concerns
Gas prices in the US continue to move lower after buyers failed to break above key resistance at 47.00 level again yesterday. Yesterday's EIA report showed a 50 billion cubic foot decline, which was a larger-than-expected but also consistent with seasonality.
However, the market is pricing in the risk of recession very strongly due to the hawkish tone of major central banks, in particular from the Fed and the ECB. Also weather forecasts changed dramatically. For the last several days, forecasts have indicated lower than standard temperatures, but the latest forecasts show that the temperature in the US from the west should rise, which may reduce the demand for gas. On the other hand, during the Christmas period demand for gas should increase and additionally, the holiday season is conducive to increased heating of houses and flats.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
US stocks change was in line with seasonality. If the price of gas is to rise at the end of this year, inventories must fall above 100 billion cubic feet per week. Source: Bloomberg
Forecasts from the beginning of the week and the end of the week. One can notice that temperatures are about to start rising, although at the same time in the key heating regions - central and western states, the temperature is expected to remain significantly below average. Source: Bloomberg
Gas fell sharply at the end of this week, but at the same time it is worth remembering that price gaps occur very often during this period and such a gap may occur at the beginning of the next week. It can be seen that the current demand is located around $6-6.3, but at the same time, if the forecasts continue to improve over the weekend, the price gap could bring gas to as low as $5.5/MMBTU. On the other hand, if the temperature drops, the price gap could extend above $7/MMBTU. Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
