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12:12 PM · 17 May 2023

NATGAS jumps 2.5%❗

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US natural gas prices trade 2.5-3.0% higher in the early afternoon today. This is continuation of the upward impulse launched on Friday, when news hit the markets that a significant drop in production may be looming in near-term. Number of gas drilling rigs saw the biggest drop since 2017 and reached the lowest levels since mid-2022. This suggests that natural gas production will not only stop to increase but may start to drop soon. Moreover, it is expected that natural gas demand from power plants will jump to record levels over the summer, what would further reduce comparative inventories.

Significant drop in US gas rigs may mean that natural gas production will not only stop to increase but may actually start to drop. Source: Bloomberg, XTB

NATGAS is nearing 50% retracement of the downward move launched in February 2023. Simultaneously, price is also making another attempt at breaking above the upper limit of the upward channel. Should we see a break above 50% retracement as well as $2.5/MMBTu, one could say that bull market has begun. However, it should also be noted that such high volatility on natural gas market is nothing unusual. Source: xStation5

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